Chief Economist Scott Brown discusses the latest market data.
The economic data reports remained supportive but were largely ignored. Investors waited for President Biden’s nominee for Fed chair (Powell or Brainard) and debated when the Fed may begin to raise short-term interest rates.
Retail sales rose 1.7% in October (+16.3% year over year), also up 1.7% (+17.6% year over year) ex-autos. Department store sales were up 2.2% (+27.6% year over year) and sales of electronics and appliances rose 3.8% (+18.4% year over year). Industrial production rose 1.6% in October, following a hurricane-related 1.3% decline in September. Manufacturing output rose 1.3% (+4.9% year over year) led by an 11.0% rebound in motor vehicle production (-3.6% year over year). Capacity utilization, a key indicator of inflation pressures during the 1970s, remains below its long-term average. Single-family building permits rose 2.7%, down 6.3% from a year ago but still above the pre-pandemic level.
Next week: The economic data reports bunch up on Wednesday and none of them are expected to be market-moving. The Federal Open Market Committee (FOMC) minutes from Nov. 2 to 3 may show some difference of opinion among senior Fed officials regarding the pace of tapering – some likely wanted to go faster than the agreed-upon initial pace of $15 billion per month. We’ll also learn whether there was discussion of raising short-term interest rates.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.344||1.326|
|Dollars per Euro||1.128||1.188|
|Japanese Yen per Dollar||113.650||103.740|
|Canadian Dollars per Dollar||1.266||1.307|
|Mexican Peso per Dollar||20.811||20.190|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.74||1.82|
Treasury Yield Curve – 11/19/2021
As of close of business 11/18/2021
S&P Sector Performance (YTD) – 11/19/2021
|November 22||—||Existing Home Sales (October)|
|Novmeber 24||—||Jobless Claims (week ending November 20)|
|—||Real GDP (3Q21, 2nd estimate)|
|—||Durable Goods Orders (October)|
|—||Personal Income and Spending (October)|
|—||New Home Sales (October)|
|—||UM Consumer Sentiment (November)|
|—||FOMC Minutes (November 2-3)|
|November 25||—||Thanksgiving (markets closed)|
|November 30||—||CB Consumer Confidence (November)|
|December 1||—||ISM Manufacturing Index (November)|
|December 3||—||Employment Report (November)|
|December 10||—||Consumer Price Index (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 18, 2021.