Equity markets rallied again last week as the holiday-shortened trading week moved all three major indexes higher for week, month, and year! It is important to stress that last point about where we are in 2024, with only one month of trading left. See Chart 1 below from Valley National Financial Advisors and Y Charts, showing the year-to-date performance of each of the major indexes for 2024. The minutes from the November 6-7 FOMC meeting were released last week, and officials reiterated that while inflation remains a bit above their target of 2.00%, employment is healthy, and price pressures are easing enough that trading markets have once again priced in a 25-basis point rate cut at the December 17-18 FOMC Meeting. As a result of this news, bond yields fell, with the yield of the 10-year note dropping 18 basis points to close the week at 4.25%.


U.S. & Global Economy
Last week’s economic calendar was relatively quiet due to the Thanksgiving holiday, but a few key releases stood out. The most notable was Tuesday’s Federal Open Market Committee (FOMC) meeting minutes, which revealed broad support for a cautious approach to easing monetary policy. This careful stance is driven by inflation still exceeding the Fed’s target and strong economic growth, prompting the central bank to carefully assess incoming data before making policy changes. On Wednesday, the Personal Consumption Expenditures (PCE) Price Index came in as expected, remaining above the Fed’s 2.0% target. The Conference Board’s November Consumer Confidence Index, released on Tuesday, exceeded expectations, reaching a 16-month high. Meanwhile, October’s durable goods orders fell short of expectations, signaling that the industrial sector’s slowdown persists. Lastly, preliminary data from Mastercard SpendingPulse showed a 3.4% year-over-year increase in U.S. retail sales (excluding automobiles) on Black Friday, up from 2.5% growth the previous year.
Policy and Politics
President-elect Trump announced that his first order of business would be imposing tariffs on goods imported from China, Canada, and Mexico. As a result, the Canadian Dollar and Mexican Peso sold off when compared to the U.S. Dollar, but the Chinese Yuan remained unchanged. This move has raised concerns among economists, as Mexico and Canada are major U.S. trade partners. The tariffs could affect industries like vehicles, dairy, and building materials, potentially leading to higher prices for American consumers and retaliation from Mexico and Canada.
Economic Numbers to Watch This Week
- U.S. Job Openings: Total Nonfarm for October 2024, prior 7.443M
- U.S. Durable Goods New Orders MoM for October 2024, prior -0.74%
- U.S. Initial Claims for Unemployment Insurance for the week of Nov 30, 2024, prior 213,000
- U.S. Labor Force Participation Rate for November 2024, prior 62.60%
- U.S. Nonfarm Payrolls MoM for November 2024, prior level 12.00K
- U.S. Unemployment Rate for November 2024, prior rate 4.10%
- U.S. Index of Consumer Sentiment for October 2024, prior 71.80
The week ahead looks action-packed for economic data. We’ll get an update on U.S. economic activity with the release of the ISM services and manufacturing PMIs, plus a closer look at the job market with Friday’s November nonfarm payroll report. On the growth side, the ISM manufacturing PMI is expected to tick up to 48, still showing contraction, while the ISM services PMI should stay strong in expansion territory at 55.4. As for jobs, nonfarm payrolls are forecasted to rise by 200,000—much stronger than the previous month’s 12,000 gain, which was impacted by the Boeing strike and hurricanes. The unemployment rate is expected to rise up to 4.2% from 4.1%. We expect the job market to stay solid, supporting consumer spending and helping the economy grow. As we look toward 2025, key market risks include the potential return of inflation, uncertainty around U.S. monetary policy, rising trade tensions, ongoing geopolitical instability, and concerns over historically high stock valuations. If you have any questions or need further insights, please get in touch with your advisor at Valley National Financial Advisors.