Chief Economist Scott Brown discusses the latest market data.
Election results (a divided Washington) and good news on a potential vaccine boosted share prices, although there were some concerns about surging COVID-19 cases (163,402 reported on November 12) and possible difficulties in distributing the vaccine.
Weekly jobless claims fell to 709,000, trending lower, but still very high by historical standards (the figures tend to be noisy in the final two months of the year). The Consumer Price Index (CPI) was unchanged in October (+1.2% y/y). Ex-food and energy, the CPI was also flat (+1.6% y/y). Prices that were depressed in the March/April lockdown rebounded in June, July and August, but there appears to be no broad-based pickup in underlying inflation in the last couple of months. The UM Consumer Sentiment Index fell in the mid-November reading, reflecting Republican disappointment in the election and concerns about rising COVID-19 cases.
Next week, the mid-month economic reports are expected to remain consistent with a moderate pace of growth. Unit motor vehicle sales edged down last month, which should restrain overall retail sales. September retail sales (+1.9%) were exaggerated by the seasonal adjustment (weaker back-to-school sales in August led to a smaller letdown in September, which shows up as a seasonally adjusted gain). Industrial production should continue to improve. Residential construction activity is expected to be unseasonably strong. None of this may matter much for the financial markets, which are likely to be focused on the virus and vaccine news.
Indices
| |
Last |
Last Week |
YTD return % |
| DJIA |
29080.17 |
28390.18 |
1.90% |
| NASDAQ |
11709.59 |
11890.93 |
30.50% |
| S&P 500 |
3537.01 |
3510.45 |
9.48% |
| MSCI EAFE |
2001.32 |
1916.22 |
-1.75% |
| Russell 2000 |
1708.47 |
1660.05 |
2.40% |
Consumer Money Rates
| |
Last |
1 year ago |
| Prime Rate |
3.25 |
4.75 |
| Fed Funds |
0.08 |
1.54 |
| 30-year mortgage |
2.88 |
3.85 |
Currencies
| |
Last |
1 year ago |
| Dollars per British Pound |
1.3118 |
1.285 |
| Dollars per Euro |
1.1806 |
1.101 |
| Japanese Yen per Dollar |
105.13 |
108.82 |
| Canadian Dollars per Dollar |
1.314 |
1.325 |
| Mexican Peso per Dollar |
20.631 |
19.356 |
Commodities
| |
Last |
1 year ago |
| Crude Oil |
41.12 |
57.12 |
| Gold |
1873.30 |
1463.30 |
Bond Rates
| |
Last |
1 month ago |
| 2-year treasury |
0.18 |
0.24 |
| 10-year treasury |
0.88 |
0.72 |
| 10-year municipal (TEY) |
1.31 |
1.42 |
Treasury Yield Curve – 11/13/2020
As of close of business 11/12/2020
S&P Sector Performance (YTD) – 11/13/2020
Economic Calendar
| November 17 |
— |
Retail Sales (October) |
| |
— |
Industrial Production (October) |
| November 18 |
— |
Building Permits, Housing Starts (October) |
| November 19 |
— |
Building Permits, Housing Starts (October) |
| |
— |
Jobless Claims (week ending November 14) |
| |
— |
Existing Home Sales (October) |
| |
— |
Leading Economic Indicators (October) |
| November 24 |
— |
CB Consumer Confidence (November) |
| November 25 |
— |
Real GDP (3Q20, 2nd estimate) |
| |
— |
Durable Goods Orders (October) |
| |
— |
Personal Income and Spending (October) |
| |
— |
New Home Sales (October) |
| November 26 |
— |
Thanksgiving Holiday (markets closed) |
| December 4 |
— |
Employment Report (November) |
| December 16 |
— |
FOMC Policy Decision |
All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business November 5, 2020.
Read more commentaries by Raymond James
