The markets continued to flourish last week. Traders were not deterred by a warning from the Federal Reserve Chairperson that interest rate hikes may not be over, and it is premature to speculate when rate decreases will begin. The S&P 500 and the Dow reached new 2023 highs, while the Nasdaq posted solid returns as all three indexes extended a run of five straight weekly gains. Despite additional output cuts by OPEC+, crude oil prices continued to lag as demand remained soft. Ten-year Treasury yields closed down nearly 80.0 basis points from a peak in October. Yields fell over 50.0 basis points in November, marking the largest monthly decline since August 2019. The dollar weakened, while gold prices finished the week at a record high.
Last Week’s Economic News
- The economy accelerated at an annualized rate of 5.2% in the third quarter, according to the second estimate of gross domestic product. GDP rose 2.1% in the second quarter.
- The personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, increased less than 0.1% in October. For the 12 months ended in October, the PCE price index rose 3.0%, 0.4 percentage point lower than the 12-month period ended in September.
- Sales of new single-family homes fell in October. The median sales price of new houses sold in October 2023 was $409,300. The average sales price was $487,000. Inventory of new single-family homes for sale was at a 7.8-month supply at the current sales pace.
- A decline in new orders dragged manufacturing lower in November, according to the latest S&P Global US Manufacturing PMI®, which led to a reduction in the labor force.
- The advance report on international trade in goods showed an increase in the trade deficit of $89.8 billion in October over September deficit.
- The national average retail price for regular gasoline was $3.238 per gallon on November 27.
- For the week ended November 25, there were 218,000 new claims for unemployment insurance, and the advance number of those receiving unemployment insurance benefits during the week ended November 18 was 1,927,000, an increase of 86,000 from the previous week’s level. This is the highest level for insured unemployment since November 27, 2021, when it was 1,964,000.
Eye on the Week Ahead
Economic data released during the first full week of December focuses on employment. The latest Job Openings and Labor Turnover Survey is for October. The previous report estimated 9.6 million job openings available in September, relatively unchanged from the prior month’s total. This week, focus will also be aimed at the latest employment situation report for November. Employment has shown signs of slowing, with an estimate of 150,000 new jobs added in October, well below the downwardly revised September total of 297,000.
Have a nice week!
Sincerely,
Robert G. Carpenter