Markets expect little volatility this week

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Published Date 12/23/2024

Tuesday the stock and bond markets will close early, off on Wednesday then two days with little important data. This week begins two weeks of holidays for a lot of participants.

No news of consequence over the weekend. Last Friday the Fed’s favorite inflation data, PCE. The overall increased 0.1%, the core month/month also +0.1%, the increase in inflation the smallest increase in three months. “What I hear more than you would think is, don’t get one-tenth off inflation and break the economy,” San Francisco Fed President Mary Daly said Friday in an interview on Bloomberg. “I don’t want to see a rise in the unemployment rate just to get a quarter (three months) ahead on our 2% goal.” At his press conference Powell said rates are still high enough to slow inflation. He also indicated somewhat lower borrowing costs would help prevent the unemployment rate from rising any higher. Looking at year/year core at 2.8% was unchanged from November. At the FOMC meeting where the Fed released its quarterly forecasts the Fed isn’t looking for inflation to ease, the forecast for 2025 increased from 2.1% in the forecast released in September to +2.5%. The indication from the Fed, two rate cuts next year instead of four the Fed predicted in September, the reaction sent stock indexes down and rates up.

At 9:30 am the DJIA opened -69, NASDAQ +108, S&P +13. 10 year note 4.54% +2 bp. FNMA 6.0 30 year coupon at 9:30 am -6 bps from Friday’s close and -14 bps from 9:30 am Friday morning.

At 10 am December consumer confidence index declined, expected at 113.0 from 111.7 but reported at 104.7.

November durable goods orders released at 9:30 am. Orders declined 1.1% month-over-month in November following an upwardly revised 0.8% increase (from 0.2%) in October. Excluding transportation, durable goods orders decreased 0.1% month-over-month following an upwardly revised 0.2% increase (from 0.1%) in October.

The next two weeks usually result in little change, the economic calendar doesn’t have much key data. Any big movement in stocks and bonds depends on any major news from the mid-east. Syria is undergoing huge changes, Iran always a threat to roil issues, a peace plan is said to be close between Israel and Hamas.

This Week’s Economic Calendar:

Monday

9:30 am November durable goods orders (-0.2%, ex vehicles +0.3%, core capital goods +0.1%). Orders declined 1.1% month-over-month in November following an upwardly revised 0.8% increase (from 0.2%) in October. Excluding transportation, durable goods orders decreased 0.1% month-over-month following an upwardly revised 0.2% increase (from 0.1%) in October.

10 am December consumer confidence index (113.0 from 111.7) reported at 104.7.

1 pm $69B 2 year note auction

Tuesday,

10 am November new home sales (664K from 610K in October)

11:30 am $70B 5 year note auction

1 pm Stock market close

2 pm Bond market close

Thursday,

8:30 am weekly jobless claims (223K from 220K)

1 pm $44B 7 year note auction

Friday,

Nothing important

Source: TBWS

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