Fed Rates: Wealth Economic Update Nov. 28, 2016

U.S. and World News

  • rate518867918Minutes from the November Federal Reserve meeting were released this week and were consistent with Fed Chair Janet Yellen’s recent congressional testimony. Most officials saw a rate increase occurring “relatively soon, so long as incoming data provided some further evidence of continued progress toward the Committee’s objectives.” While this meeting occurred before the Presidential election which seemed to catch markets off-guard, recent data has continued to be strong enough to likely warrant a rate hike in December.
  • OPEC will debate an oil output cut of between 4%-4.5% at its meeting in Vienna next week. The output cut had originally been agreed to on September 28th but the details behind its implementation still need to be worked out. The deal is still no sure thing as some of the member countries are opposed, for example Iran, which was only recently allowed to re-enter the global oil markets and therefore does not want to cut production.

Markets

  • This week the S&P 500 increased 1.45% and closed at 2,213. The Dow Jones rose 1.51% and closed at 19,152. So far in 2016, the S&P is up 10.29% and the Dow is up 12.41%.
  • Interest rates increased significantly higher once again this week as investors foresee higher inflation in the future as a result of a Trump presidency. The Dollar index hit 100 for the first time in almost a year after it rose by more than 1% this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.84% and 2.36%, respectively.
  • The spot price of WTI Crude Oil fell 0.65% this week to close at $46.06 per barrel. WTI Crude is up 4.18% in 2016.
  • The spot price of Gold fell 2.01% this week, closing at $1,183.56 per ounce. Year to date, gold prices are up 11.54%.

Economic Data

  • Initial jobless claims came in at 251,000, an increase from last week’s reading of 235,000. The increase is likely due to a rebound from last week’s decline in claims caused by the Veteran’s Day holiday. The four week moving average for claims moved down to 251,000.
  • Existing home sales increased by 2.0% in October, better than consensus estimates of a     -0.6% decline. Sales of single family units increased by 2.3%, while multi-family unit sales were unchanged from the prior month.
  • New home sales declined by -1.9% in October, below consensus forecasts. Sales declined in the South, Midwest and Northeast regions while rising in the West region.

Fact of the Week

  • 32% of Millennials (defined as the 75 million Americans ages 19-35) are currently living with their parents. (Source: Pew Research Center)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

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