U.S. and World News
- European Central Bank President Mario Draghi announced a new stimulus plan this week that included extending the central bank’s €60 billion per month bond buying program to at least March 2017. In addition, the ECB cut its deposit rate further into negative territory, dropping it 0.1% to -0.3%. However, the measures appear to have disappointed the markets as European indices were down significantly following the announcement. ECB action thus far has failed to spur significant economic growth and inflation in the Eurozone.
- The International Monetary Fund has added the Chinese yuan to its Special Drawing Rights Basket this week in a much anticipated announcement. The addition will be official in October 2016 and will increase China’s economic standing in global finance as it makes the yuan more freely accessible and tradable.
- The House and Senate have reached an agreement on a five year highway bill that will add $305 billion to infrastructure spending that is sorely needed. The bill also reauthorizes the Export-Import Bank which had its charter expired in June after some Republicans targeted it as a waste of government funds. The bill has now moved to President Obama’s desk where it is expected to be approved.
- At its semi-annual meeting in Vienna this week, members of OPEC have decided to maintain the cartel’s production ceiling of 30 million barrels per day even as oil markets remain in a supply glut. It was just over a year ago at the meeting when OPEC made the same call to maintain supply at current levels, sending crude oil prices spiraling lower. Many believe that OPEC’s stance is an attempt to drive out U.S. shale producers that have much higher costs of production.
- Markets rose modestly in volatile end of week trade, falling on the ECB’s stimulus measures that were less than expected and then rising on a moderately strong employment report. The S&P 500 gained 0.12% and closed at 2,092. The Dow Jones followed suit by rising 0.36% and closing at 17,848. Year to date, the S&P is up 3.56% and the Dow is up 2.50%.
- Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.71% and 2.27%, respectively.
- The spot price of WTI Crude Oil fell by 3.76% this week, closing at $40.14 per barrel. Year to date, Oil prices are down 33.07%.
- The spot price of Gold increased by 2.74% this week, closing at $1,086.44 per ounce. Year to date, Gold prices are down 8.24%.
- Initial jobless claims came in at 269,000 which was an increase from last week’s reading of 260,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 269,000.
- The November nonfarm payroll report showed the addition of 211,000 during the month, beating expectations of 200,000. Employment growth over the prior two months was revised up by a total of 35,000, bringing the three month average to 220,000 jobs created.
- The unemployment rate remained unchanged at 5.0%, in line with expectations. The labor force participation rate rose by 0.1% to 62.5%
- Average hourly earnings increased by 0.2% in November, bring the 12 month increase in wages to 2.3%.
Fact of the Week
- According to the Government Accountability Office, an estimated 9,300 Americans will turn 65 years old each day in 2016, representing the 6th of 19 years that “Baby Boomers” will turn 65. It’s estimated that by 2029, there will be 11,400 Americans turning 65 each day.
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