Inflation ticked up slightly to 2.7% in the December 11 CPI release, while the "Core CPI" held steady at 3.3%. These two charts explore shorter-term and long-term inflation trends. On the same day, both the S&P and Nasdaq posted gains.
The Fed met on December 17-18, and the general consensus was correct: it reduced its benchmark rate by another 0.25%. This chart reviews Fed benchmark changes through the 11/7/24 reduction.
The preliminary December Consumer Confidence reading hit its highest point in 7 months.
The Fed, interest rates, stock markets, why people moved, new census data, debt snapshots
Interest rates: Counter-intuitively, rates have climbed since the Fed first started reducing their benchmark rate - because the reductions and guidance on future cuts were never as substantial as investors desired.
Stock markets: The sudden drop from the latest historic highs followed the latest Fed pronouncement (but have rebounded slightly so far this morning). But as illustrated, short-term ups and downs are very common.
Census estimates for why people moved in 2023:
New Census graphic: Foreign-born populations by state
Business confidence has also risen, per this quote from Wall Street Journal 12/11:
"On Tuesday, the National Federation of Independent Business said its small-business optimism index jumped in November to its highest reading since June 2021. The Business Roundtable CEO Economic Outlook Index, which measures company plans for capital investment, hiring and sales, rose to the highest level in more than two years."
The latest national jobs report bounced back after the previous month's plunge (generally ascribed to the effects of the recent hurricanes). Unemployment ticked up slightly.
Realtor.com released its forecast for next year: Link to Realtor.com 2025 market forecast
Census graphic on national data on home improvement expenditures:
The Fed, interest rates, stock markets, why people moved, new census data, debt snapshots
"The Federal Reserve cut interest rates by a quarter point on Wednesday, bringing the target range to 4.25% to 4.5%. The central bank revised its outlook for rate cuts in 2025, however, indicating that there will be two reductions. That’s down from the four forecast in September. Fed Chair Jerome Powell said that the central bank would be looking for progress on inflation, noting, 'We have been moving sideways on 12-month inflation.'" CNBC, 12/18/24
The suggestion of only 2 cuts in 2025 was not what investors and bond markets wanted to hear. Stock markets plunged yesterday, though they started to rebound slightly today, and mortgage interest rates spiked up. These changes constitute very short-term data.
Interest rates: Counter-intuitively, rates have climbed since the Fed first started reducing their benchmark rate - because the reductions and guidance on future cuts were never as substantial as investors desired.
Stock markets: The sudden drop from the latest historic highs followed the latest Fed pronouncement (but have rebounded slightly so far this morning). But as illustrated, short-term ups and downs are very common.
Census estimates for why people moved in 2023:
New Census graphic: Foreign-born populations by state
Highlights from a new Census report
Snapshots regarding debt: Mortgage, credit card, margin, federal. Except pertaining to mortgage debt (which, though ticking up, remains historically very low), indicators pertaining to margin (investor), credit card and, especially, Federal debt are not moving in positive directions. The huge, continuing increase in federal debt and debt payments may eventually have serious ramifications for bond markets - and mortgage rates.
Snapshots regarding debt: Mortgage, credit card, margin, federal. Except pertaining to mortgage debt (which, though ticking up, remains historically very low), indicators pertaining to margin (investor), credit card and, especially, Federal debt are not moving in positive directions. The huge, continuing increase in federal debt and debt payments may eventually have serious ramifications for bond markets - and mortgage rates.
