Chief Economist Scott Brown discusses the latest market data.
Inflation figures surprised to the upside. The Consumer Price Index rose 0.9% in October (+6.2% year over year), up 0.6% (+4.6% year over year) excluding food and energy. Gasoline rose 6.1% (+49.6% year over year). Used vehicle prices rose 2.5% (+26.4% year over year). The Bureau of Labor Statistics noted that price increases were “broad-based,” while the Cleveland Fed’s Trimmed-Mean CPI – which excludes the highest and lowest price moves – rose 0.7%, suggesting the range of items experiencing higher inflation is widening, in contrast to the narrow range of higher inflation seen in the spring. The Producer Price Index indicated higher inflation at the earlier stages of production.
The University of Michigan Consumer Sentiment survey results for early November showed that higher inflation pushed sentiment to its lowest level in a decade, while partisan splits in sentiment widened further. The Chicago Fed Advance Retail Trade Summary (CARTS) showed strong results for October. Job openings were off their highs again in September, but quit rates continued to set records as 4.4 million workers quit their jobs that month.
Next week: Retail sales are expected to be very strong in October. Some of that increase reflects higher prices. However, it’s likely that all the news about possible shortages due to supply chain issues led many to start their holiday shopping early. Investors will also be awaiting the announcement of President Biden’s nominee for Fed chair.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.3392||1.312|
|Dollars per Euro||1.1451||1.181|
|Japanese Yen per Dollar||113.97||105.13|
|Canadian Dollars per Dollar||1.259||1.314|
|Mexican Peso per Dollar||20.615||20.631|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.69||1.80|
Treasury Yield Curve – 11/12/2021
As of close of business 11/11/2021
S&P Sector Performance (YTD) – 11/12/2021
|November 16||—||Import Prices (October)|
|—||Retail Sales (October)|
|—||Industrial Production (October)|
|—||Homebuilder Sentiment (November)|
|November 17||—||Building Permits, Housing Starts (October)|
|November 18||—||Jobless Claims (week ending November 13)|
|—||Leading Economic Indicators (October)|
|Novmeber 24||—||Real GDP (3Q21, 2nd estimate)|
|—||Durable Goods Orders (October)|
|—||Personal Income and Spending (October)|
|—||New Home Sales (October)|
|—||FOMC Minutes (November 2-3)|
|November 25||—||Thanksgiving (markets closed)|
|December 3||—||Employment Report (November)|
|December 15||—||FOMC Policy Decision|
All expressions of opinion reflect the judgment of the author and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business November 11, 2021.