Market momentum fades as investors price in December rate hike
WEEKLY MARKET COMMENTARY |
The first two weeks of November have not been kind to equity investors as the momentum generated in October has dissipated. Meanwhile, investors have priced in a 25 basis point rate increase by the Federal Reserve in December and the likelihood of another 50 basis points in rate hikes in the first half of next year. Consequently, fixed income investors have pushed up yields on the U.S. 10-year Treasury to 2.28 percent from 2 percent just a month ago.
There will be a modest number of first-tier economic releases this week featuring fresh data on inflation, regional manufacturing, housing starts and industrial production. The minutes from the Fed’s October meeting will be published on Nov. 18 and the central bank will send five speakers out to address the economic outlook this week, with the most prominent likely being St. Louis Fed President James Bullard’s talk on Nov. 20.