Weekly Macro Matters
Macro Matters – Weekly review, w/c December 18
US stocks reached new highs, led by a dovish Fed pivot, while global central banks took varied stances on monetary policy. CPI and retail sales data showed resilience, fueling optimism about economic momentum.
TradeDay Macro Matters
Macroeconomic / Geopolitical Developments
• US Stock Averages Hit Multi-Month Highs, DJIA at New Record
A dovish Federal Reserve shift propelled the Dow Jones Industrial Average to record highs, with a 12% post-October surge. This marked the longest weekly winning streak since 2017, driven by robust performances from Apple, Intel, Microsoft, and Salesforce.
• US CPI Mostly in Line with Expectations
November CPI rose 3.1% year-over-year, reflecting a stable decline from the June 2022 peak of 9.1%. Core CPI, excluding food and energy, held steady at 4.0%. Monthly gains included a 0.2% rise in food prices and a 0.4% increase in shelter costs, underscoring a relatively balanced economic environment.
• US Retail Sales Beat Consensus
Retail sales increased 0.3% in November, defying expectations and reflecting consumer resilience. Key growth sectors included online sales, motor vehicles, and sporting goods, while gasoline and building materials lagged. Core retail sales climbed 0.4%, reinforcing a strong holiday shopping season.
• Fed Pivots Dovish
The Federal Reserve held rates steady and signaled more 2024 rate cuts than previously projected. Chair Jerome Powell highlighted progress on inflation, now at 3.1%, and emphasized the unlikelihood of further hikes. Treasury yields dropped, and markets surged, though questions remain about sustaining this optimism.
• Bank of England and European Central Bank Stay Hawkish
In contrast to the Fed, the ECB and Bank of England maintained hawkish stances. The ECB affirmed tight policies and dismissed rate cut discussions, while the Bank of England held rates at 5.25%, citing persistent inflation concerns. Analysts highlight diverging global approaches to monetary policy amidst complex economic conditions.
What’s Ahead
Central Bank Watch:
• Tuesday, December 19: RBA Meeting Minutes, BoJ Monetary Policy Decision and Statement.
• Wednesday, December 20: PBoC Interest Rate Decision.
Macro Data Watch:
• Tuesday and Wednesday: CPI reports from the EU, Canada, and UK.
• Wednesday, December 20: US Consumer Confidence.
• Friday, December 22: US PCE (MoM, YoY), Durable Goods, Michigan Consumer Sentiment Index.
Key Dates and Events:
• Monday, December 18: German IFO Survey.
• Tuesday, December 19: BoJ Meeting, EU Harmonized Index of Consumer Prices, Canadian CPI.
• Wednesday, December 20: UK Inflation Report, German and EU Consumer Confidence, US Consumer Confidence.
• Thursday, December 21: US GDP and PCE (QoQ), Canadian Retail Sales.
• Friday, December 22: Japan CPI, UK GDP and Retail Sales, US PCE and Durable Goods, Michigan Consumer Sentiment.
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