Last week, warm November inflation readings for CPI and PPI put downward pressure on stocks and bonds, with the S&P 500 declining 0.61% and longer-term yields increasing 0.25%. Rent inflation has been stubborn since the pandemic, but last week’s underlying data for rents showed their weakest pace in over three years, suggesting further progress on inflation.
Investors will focus on retail sales and the FOMC rate decision this week. The CME FedWatch has a 95.4% probability of a 0.25% rate cut. Cutting the Federal Funds Rate by 0.25% would lower the prime rate to 7.5%. The prime rate is used as a basis for many variable-rate loan products, including credit cards and home equity lines of credit. It peaked at 8.5% in July 2023.
For a deeper dive into last week’s markets and economic events, read the latest issue of Market Week.
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Regards,
David Bennett