Weekly Market Update for December 27, 2024
by Jared Plotz, Director of Research
It proved to be a very quiet week. Equity markets rose ahead of the Christmas holiday and then drifted lower afterwards. The S&P 500 ended the shortened week up +0.67%, while the Nasdaq rose +0.76%. The 10-Year Treasury, a rate indicator, closed the week at 4.62%, up +9 bps from last week. The 6-Month Treasury, a favorite of our US Treasury strategy, ended up +1 bp at 4.30%. Preferred securities were pressured by the rise in long-term interest rates, with the 10-Year yield up +45 bps since November. However, we still expect that if inflation can remain manageable and the Federal Reserve reduces short-term rates, long-term rates will follow lower, a potential benefit to Preferred securities next year.
Consumer Confidence, measured by the Conference Board, weakened in December, though survey participants noted tamer expectations of inflation with a weaker job outlook. In line with the latter outlook, weekly continuing unemployment claims were the highest in three years. Official job openings data for November won’t come for a couple weeks, but indicators suggest fewer available positions. Given the Federal Reserve’s dual mandate of promoting stable prices and maximum employment, a looser job market would give weight on the balance towards rate cuts.
More notable headlines came from outside the US, with China’s industrial profits falling harder than anticipated and another presidential impeachment in South Korea. Lawmakers in South Korea voted to impeach the acting president after impeaching the prior president less than a month ago. Meanwhile, a big merger of steel companies hangs in the balance, as President Biden weighs whether to block Japan’s Nippon Steel from acquiring U.S. Steel.
Wall Street activity will be slowed again by the New Year’s Day holiday next week. The markets, and our office, will be closed Wednesday. Economic readings and regulatory decisions will again be rather quiet as the December jobs report gets pushed to the following week. Happy New Year from all of us at UIA!
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