Looking Back at the Markets in November and Ahead to December 2023

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Markets improved last month across the board as interest rates pulled back on signs of slowing growth. U.S. markets were up by high-single to low-double digits, while international markets were also up by high-single digits. Even fixed income posted gains of around 5 percent. For the first time in a while, everything went up.

Looking Back

Interest rates and the economy. Interest rates drove the strong performance in November. Better inflation numbers raised hopes that the Fed would start cutting rates next year, and signs of slower but continued economic growth supported that idea. Between job growth slowing to more normal levels, lower but healthy consumer confidence and spending, and the continued weakness in manufacturing, the economy seemed to be settling into a soft landing, which should keep pulling inflation down.

In response, the yield on the 10-year U.S. Treasury dropped back to levels last seen in September, which drove markets higher.

Looking Ahead

Market expectations. December may see a change in expectations. Markets have been calmer this month, and there is some commentary that they may have gotten ahead of themselves. While the seasonal factors remain positive—years when markets are up as much as they have been this year typically finish strong—the size of last month’s gains could result in slower growth this month or even some giveback. Either way, conditions should remain positive, but less so than last month.

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