Baker Market Update – wk211223

Happy Christmas Eve… Eve to all! As our offices will be closed tomorrow for actual Christmas Eve, the weekly Baker Market update finds you a day early.

There were several economic releases this morning, but up first was the monthly release of the Federal Reserve’s preferred measure of the inflation, Personal Consumption Expenditures (PCE). PCE rose 5.7% in November from 5% in October and the monthly increase of 0.6% was in line with expectations. Additionally, Core PCE (excludes food and energy) increased to 4.7% from 4.1% on an annual basis with a monthly increase of 0.5%, slightly above expectations of 0.4%. The continued spike in inflation comes not long after the Fed’s pivot away from its dovish policy stance.

Consumer spending, which accounts for 70% of U.S. economic activity, rose 0.6% in November, a decent gain but below the 1.4% increase in October. Personal incomes, which is a driver of future spending increases rose 0.4% in November, slightly lower than the 0.5% increase in October.

Weekly initial jobless claims were 205,000, unchanged from the prior week and below pre-pandemic levels. Continuing jobless claims drop to 1.859 million, a small decrease of 8,000 from the previous week. That is the lowest level for insured unemployment since mid-March 2020.

Stocks are up early this morning with the Dow Jones Industrial Average up 215 points. Are stocks seeing a bit of a Santa Clause rally this morning? The treasury markets are seeing a bit of a selling off with the 10-Year Treasury Yield is hovering just below 1.50%.

We at The Baker Group hope that everyone has a safe, healthy, and most importantly, a Merry Christmas! I plan on watching a Christmas Movie tonight with the family, our favorite is the 2003 Will Ferrell Classic “Elf.” Maybe I should answer the phone today with “Buddy the Elf, what’s your favorite color?” Merry Christmas!

Personal Consumption Expenditures Year over Year % Change – December 2015 to Present

Source: Bloomberg Finance, L.P.

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Dale Sheller

Senior Vice President
Financial Strategies Group
The Baker Group LP

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