Friday's Markets Update (December 20, 2024)

21 Dec 2024 by rate3

On Friday, stocks rallied, recovering from earlier losses as core PCE prices increased the least since May. Part of the market now hopes that the Fed will reassess its stance. The dollar fluctuated near a 2-year high. EU consumer confidence reached a 6-month low. The Bank of China kept its rates unchanged. UK car production dropped to ATL since 1980. BTC and ETH attempted to recover after falling ~10% and ~25%, respectively.

Details

Annual PCE inflation rose to 2.4% in November, slightly below expectations. Since 1960, PCE inflation has averaged 3.29%, reaching a high of 11.6% in 1980 and a low of -1.47% in 2009. Core PCE inflation rose 0.1% MoM in November, the smallest increase in six months. Annual core PCE inflation unexpectedly remained steady at 2.8%. 1Y trend: "Down" (BEA)
The University of Michigan consumer sentiment index rose to 74 in December, the highest level since April , driven by improved expectations for future economic conditions. While consumers believe the economy has improved, inflation concerns remain. 1Y trend: "Up" (UMC)

Crypto

The American stock market has surpassed $64T, adding $40T in 10 years, and reaching 74% of the World's market. Tech giants have fueled this growth. (source)

World Markets

Eurozone consumer confidence fell to -14.5 in December, reaching a six-month low. This decline was slightly worse than expected, with consumers becoming less optimistic about the economic outlook. 1Y trend: "Up" (EC)
Brazilian consumer confidence declined in December, reaching a six-month low. This was primarily driven by worsening expectations for the future, likely influenced by rising interest rates and inflationary pressures, particularly on food prices. 1Y trend: "Up"
The People's Bank of China kept its key lending rates unchanged in December. This follows a pledge to increase the budget deficit and shift to a "moderately loose" monetary policy next year to boost economic growth. The central bank also indicated potential for further reserve requirement ratio (RRR) cuts. 1Y trend: "Down" (PBC)
UK car production plummeted 30% in November, reaching a 44-year low. Falling demand and concerns about government EV targets are impacting the industry. Automakers are urging the government to support the sector and review regulations to avoid factory closures. 1Y trend: "Side" (Smmt)
Japan's core inflation rose to 2.7% in November, exceeding expectations. This continues a period of inflation above the Bank of Japan's 2% target, influencing its monetary policy decisions. While the BoJ maintained rates in December, the central bank remains cautious about potential future hikes. 1Y trend: "Up" (JP)

Currencies

The dollar index eased from 2-year high of 108.5 as lower-than-expected core PCE inflation raised hopes for further Fed rate cuts. 1Y trend: "Up"

On Week 52, following the FOMC's announcement, expect a pause in macroeconomic data. Key reports to watch include Durable Goods Orders and New Home Sales for November, providing insights into manufacturing and housing. Additionally, the API Crude Oil Stock Change will offer trends in energy supplies, while Initial Jobless Claims will give insights into the labor market. Lastly, the Goods Trade Balance Advanced for November will be crucial for understanding trade dynamics.