Weekly Market Commentary December 9th to December 13th 2024

Inflation reports captured the key economic headlines this week.

The Consumer Price Index (CPI) report was in line with expectations, rising 0.3% for both the headline and core (excluding food and energy) readings for the month of November. On a year-on-year basis prices grew by 2.7% and 3.3% respectively. The closely watched core reading has been holding steady for the past four months, held up by stubbornly sticky shelter and vehicle costs.

The Producer Price Index (PPI) proved to be obstinate as well, with year-on-year readings exceeding expectations at 3.0% and 3.4% respectively for the headline and core. Food prices were a key driver to the headline figure, including a whopping 56% annual surge in the cost of eggs, the highest since early 2023. For Fed watchers, the news was more subdued as some of the key PPI measures that track to the Fed’s preferred inflation gauge (Personal Consumption Expenditures), particularly healthcare related, were little changed.

The S&P 500 was lower on the week by 0.6% while the Nasdaq Composite rose modestly by 0.3. The yield on the 10-Year U.S. Treasury was higher by 22 basis points on the week, closing at 4.39%, with a small spread of 14 basis points over the 2-Year.

The Fed’s decision on rates will be the most anticipated event next week. Key economic releases include Personal Consumption Expenditures, an update on Gross Domestic Product growth, Industrial Production, Existing Home Sales, Housing Starts and Building Permits.