December 30, 2023

Weekly Market Commentary December 26th to December 29th 2023

The holiday week saw very few economic releases and with the strong December markets, there was good cheer to be had everywhere. Weekly Initial Jobless claims came in slightly higher than expected but still very much within the recent range at 218,000.

The Chicago Fed National Activity Index and the Richmond Fed Manufacturing Index came in under expectations and are continuing signs that while the economy may be slowing, it is slowing at the pace the Fed prefers.

Recall that earlier in December, we saw the Fed pivot on keeping rates “high for longer” stance and has now signaled that rate cuts may be on the table for 2024. The soft landing may be playing out before our very eyes as economists still calling for recession are getting harder to find than Santa’s workshop.

The markets reacted to this news with exuberance with all three major stock indices testing yearly highs. The S&P 500 finished the year at 4,770, up 0.32% on the week; the Dow Jones Industrials closed at 37,690 or +0.81%; and the big winner was the tech-heavy NASDAQ which closed up 0.12% at 15,011, higher by over 44% for the year.

In fixed income, the news of pending rates cuts continues to drive yields lower across the curve. The 2-Year U.S. Treasury yield closed the final trading session at of the year at 4.25%; the 10-Year fell to 3.88%; and the 30-Year ended lower at 4.04%

Next week kicks off 2024 with the December Employment Report, ISM Services/Manufacturing, and Factory Orders. Happy New Year, friends!

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