Economic Data, Streaking Oil Prices Highlight Post-Holiday Session

Consumer, Housing Data Point to Economic Strength  As reported by the Conference Board today, its Consumer Confidence Index increased to 113.7 in November, exceeding expectations of a 109 reading and notching the highest mark since August 2001.  Nearly all of the gain was attributed to a rise in consumer expectations rather than the assessment of current conditions, as Americans anticipate Donald Trump delivering upon his capital-injecting promises in the new year.  The main areas of expected growth include the overall economy, labor market, and household incomes.

From the consumer perspective, one repercussion of the “Trump bump” has been rising mortgage rates, with recent 30-year fixed rate mortgages reaching highs last seen May 2014.  While the long-term impact may be a leveling off of home prices, US housing price increases have been strong of late.  The S&P CoreLogic Case-Shiller composite index reported a 5.1% increase year-over-year (0.85% MoM) for October, coming in just above median forecasts of 5.0%.  The largest increases (8%-10%) were recorded in the Seattle, Portland, and Dallas regions while the New York metro area experienced a modest rise of 1.7%.      

With thin trading volumes post-holiday today, all three major US stock indices are showing a marginal increase – ranging from +0.15%-0.6%, while Treasury yields/swap rates are up 1-4 bps across the curve.  The yield on the 10-year Treasury note is currently up 3 bps on the day to 2.567%

Oil Climbs for Seventh Straight Session
Matching its longest streak in more than four months, crude oil prices gained on Tuesday for the seventh consecutive trading session.  The recent trend upwards has been spurred by rhetoric from representatives of the OPEC and non-OPEC countries involved in last month’s production-cutting agreement.  The accord met initial skepticism surrounding the enactment of the supply-curbing measures, but energy ministers from many of those oil-producing countries have now come forward to publicly reassure markets that action will be taken.  Such commentary began last week when Iraqi Oil Minister Jabbar Al-Luaibi confirmed his country’s participation and dedication to the deal, and was further supported by OPEC-Secretary General Mohammad Barkindo’s announcement of the creation of a committee whose role will be to monitor the cuts and ensure participants were abiding by the terms.  In addition, this morning Venezuelan President Nicolas Maduro acknowledged his country’s 95,000 barrel per-day reduction set to take effect in the New Year stating, “I aspire to at least 10 years of stability with realistic, fair prices of oil, and I am going to achieve it.”  Both WTI and Brent crude are currently trading up 1.8% on the day, with WTI near $54/barrel and Brent just above $56.15/barrel.