Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
U.S. stocks regained traction this week after last week’s volatility. Major U.S. benchmarks all rose as concerns around the Omicron variant eased. The S&P 500 index posted its best week since February, rising almost 4 percent. The U.S. 10-year Treasury yield rose to 1.48 percent for the week, while the U.S. dollar slipped versus major peers and oil rose.
Global markets have seemed to overlook the threat of the Omicron variant as positive news from vaccine makers on the efficacy of the shots and/or boosters helped support the recent market rally.
Furthermore, over 60 percent of the U.S. population is fully-vaccinated according to the CDC website as of December 10, with the most at-risk group, those over the age of 65, reaching at least 87 percent fully vaccinated.
With the U.S. debt ceiling approaching, the House passed a bill that would help ease raising the debt ceiling by a simple majority vote, allowing separate voting in the House and the Senate. Shortly after, the Senate also cleared a path for Congress to raise the debt ceiling. The amount is still to be determined.
Looking outside the U.S., Russian military troop movement has been increasing near the Ukraine-Russia border and leaders are worried about an invasion. President Biden spoke with Russian President Vladimir Putin on Tuesday to give a stern warning about invading the Ukraine.
We saw several major U.S. economic releases last week. The U.S. trade deficit narrowed for the first time since July, indicating foreign nations have a strong demand for American goods. The deficit now sits at $67 billion, a reduction from the prior month's revised reading of $81 billion.
The number of Americans filing new claims for unemployment benefits dropped to the lowest level in more than 52 years last week as labor conditions continued to tighten amid an acute shortage of workers.
The Consumer Price Index, or CPI, rose 6.8 percent year-over-year in November, the fastest annual rate in nearly 40 years. The data reinforces the case for the Federal Reserve to speed up the pace of asset-purchase tapering.
The economic calendar this week is relatively light. On Tuesday we get the NFIB Small Business Optimism report and the popular PPI report, or the Producer’s Price Index. Mid-week, probably the most anticipated report of the week, we get November Retail Sales. Economists are expecting a drop-off in retail sales from the previous month. We also get the Fed’s rate decision on Wednesday, but no change is expected until mid-2022. Then we finish with a pretty busy Thursday, with Housing Starts, Building Permits, Capacity Utilization and Manufacturing PMI.
As always, we will be watching and reporting back to you next week. Thank you.
