Stock, Bond and Gold prices continue to rise since my last post November 6th.
The October inflation report came in below most estimates. The headline inflation was ZERO from the prior month, a big relief that prices were not going higher. Year-over-year inflation registered +3.2%.
Oil and gasoline prices fell. Rent and shelter costs did rise 0.3% and was a drag on the inflation result since shelter costs comprise about 1/3rd of the Consumer Price Index. Oil prices have fallen back to the mid - $70's now. Gasoline prices likewise fell below $3.00 at the pump, and have fallen about 20% since their mid-September highs.
The last two Federal Reserve no-hike decisions on interest rates was welcomed news. The last hike was July 26th, so many market observers think there's a good chance they are done hiking. That would signal that the Fed thinks inflation will abate even with no more interest rate hikes. They could be wrong on that though and forced to re-adjust rates.
The stock and bond markets loved the news! Stocks rose the most in 18 months in November. Interest rates fell a lot, signalling investors BUYING more debt, showing confidence that yields have peaked. Stock investors, looking now into 2024, see more clearly that the economy can reinvigorate and earnings will pick up; thus increasing corporate profits.
Stock prices on the big indexes, S&P 500 and Dow Jones Industrials rose +5.5% and +6% respectively since Nov. 6th. As of last Friday's closing, the Dow Jones is just 718 points below its all-time high set back in early 2022. Dow 36,800 will be a record high there.
Bonds did not leave the party early either. When interest rates FALL, bond prices RISE. Bonds of all stripes rallied into late November; 2.5% to 7% in prices, depending on the maturity and quality. Shorter term, investors can get 5.1% to 5.3% annual yield in less than one year Treasury Bills today. That's above the recent inflation (cited above); a good spot to park money not invested now-a-days.
Gold. War, Politics, Safety-seeking; name your worry. Gold climbed to a multi-year high on Friday, near $2,072/ounce. It gained $250/ounce since the Israeli war started. Then, weekend trading in the SPOT market saw prices rise to $2,130 briefly. Gold prices closed 2022 at $1,825.That's good enough for a +13% gain.
It's not too common for Stocks, Bonds and Gold to all move in the same direction - up or down. The November - April period of the year is favorable for stock prices vs the May - October period, so we'll see if that plays out this year into 2024.
The November inflation report is due out next week, Dec.12th. We'll handicap that for you. I'll post again in a few days with some year-end moves to make with your taxes.
Do contact me should you have a question or need further advice on the topics I write about.
Barry Unterbrink
Chartered Retirement Planning Counselor
(954) 560-3622
Unterbrink@usa.net
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