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Market Commentary: Inflation Continues to Challenge U.S. Economy as Key Indicators Rise

Market Commentary

Market Commentary: Inflation Continues to Challenge U.S. Economy as Key Indicators Rise

The PCE price deflator confirmed inflation remains a strong challenge for the U.S. economy, rising 0.6% last month and 5.7% in the last 12 months. The annual increase was the highest since 1982. Core PCE inflation rose 0.5%, suggesting food and energy prices rose only slightly more than broad consumer prices (Figure 1).

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Market Commentary: Fed Addresses Inflation Concerns, Doubles its Pace to Reduce Bond Purchases

Market Commentary

Market Commentary: Fed Addresses Inflation Concerns, Doubles its Pace to Reduce Bond Purchases

The Federal Reserve announced last week it would reduce its bond purchases faster than expected and signaled it intended to raise interest rates up to three times next year. The purchases were being reduced by $15 billion per month and will now accelerate to $30 billion per month, and the program to support the economy will end in March. One Fed governor announced a rate increase is possible for March.

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Market Commentary: Consumer Prices Continue to Climb; Annual Inflation Rises to 6.8%

Market Commentary

Market Commentary: Consumer Prices Continue to Climb; Annual Inflation Rises to 6.8%

Consumer prices continued their rapid climb in the U.S. The Consumer Price Index surged 0.8% in November and is now 6.8% higher than one year ago. Big increases in food and energy prices accounted for nearly half the gains in the monthly and annual numbers. Core inflation, which excludes those more volatile elements, increased 0.5%. Even though the inflation rate was quite high, expectations for future inflation dropped slightly (Figure 1).

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Market Commentary: Jobs Data Sends Mixed Signals as Omicron Variant Begins to Appear in U.S.

Market Commentary

Market Commentary: Jobs Data Sends Mixed Signals as Omicron Variant Begins to Appear in U.S.

The U.S. employment report continued to send contradictory signals as the fallout from the Omicron variant began to show up in data releases. The jobs report, based on research from a few weeks ago, indicated the U.S. only added 210,000 jobs compared to forecasted gains of 530,000. The household survey showed much stronger gains. Employment rose 1.1 million and unemployment dropped to 4.2%. The household report includes self-employed workers, which the employment report does not. Average hourly earnings grew 0.3% in October and have increased 4.8% in the last year.

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Market Commentary: Concerns About New Covid Variant Pushed Markets Lower; Core Inflation Rose 0.4%

Market Commentary

Market Commentary: Concerns About New Covid Variant Pushed Markets Lower; Core Inflation Rose 0.4%

Concerns about the Omicron variant raised the risk of additional lockdowns and contributed to a decline of more than 2% in the S&P 500 on the day after Thanksgiving. The COVID-19 variant, first detected in South Africa, triggered travel restrictions in the U.S. and Europe.

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Market Commentary: Retail Sales Rise as Supply Chain Issues Ease Ahead of Christmas Season

Market Commentary

Market Commentary: Retail Sales Rise as Supply Chain Issues Ease Ahead of Christmas Season

U.S. retail sales surprised economists, rising 1.7% in October (Figure 1). Rising prices contributed 1% to the growth, and increased purchases generated the remaining 0.7%. Both the top-line and after-inflation rates were higher than pre-pandemic levels. Supply chain risks may have prompted consumers to kick off Christmas shopping early at internet retailers and stores selling electronics and appliances. Those two segments contributed to the strong results.

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Market Commentary: Inflation Surges in October, and a Record 3% of Workforce Voluntarily Quitting

Market Commentary

Market Commentary: Inflation Surges in October, and a Record 3% of Workforce Voluntarily Quitting

An inflation surprise created a challenge for investors. The Consumer Price Index rose 0.9% last month. The monthly increase was the largest reached in 2021, and the yearly increase of 6.2% was the largest since 1990, when the Gulf War contributed to a surge in oil prices (Figure 1).

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Market Commentary: Strong Earnings and Employment Report Bring Good News for the U.S. Economy

Market Commentary

Market Commentary: Strong Earnings and Employment Report Bring Good News for the U.S. Economy

After a couple weak monthly reports, U.S. employment roared back in October. The U.S. created 531,000 new jobs, beating expectations for 412,500. August and September were both revised higher by more than 100,000 jobs. Private payroll increased 604,000 while government payrolls shrank 73,000. Unemployment dipped from 4.8% to 4.6%.

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Market Commentary: Supply Issues and Delta Variant Slow Economic Growth to 2%

Market Commentary

Market Commentary: Supply Issues and Delta Variant Slow Economic Growth to 2%

 U.S. GDP grew at an annualized pace of just 2% last quarter, a marked slowdown from last quarter’s 6.7% (Figure 1). Contracted auto production sliced around 2% off growth, and concerns over the Delta variant slowed demand and the return of workers to the labor force. Third quarter growth disappointed many. Final estimates were for 2.8%, and those had been much higher earlier in the quarter.

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Market Commentary: Amid Strong Start to Earnings Season, 30% of S&P 500 Will Report This Week

Market Commentary

Market Commentary: Amid Strong Start to Earnings Season, 30% of S&P 500 Will Report This Week

Thirty percent of the S&P 500 will report third quarter earnings this week. Based on earnings already in and analyst expectations, earnings are expected to grow 32.7% compared to last year as corporations continue to bounce back from a COVID-led earnings decline.

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