Daily Market Color

Risk Assets Edge Higher on Strong Data

GDP Revised Lower, Jobless Claims Higher          

The Commerce Department’s third estimate of Q3 GDP headlined today’s economic data releases, where a 0.1% downward revision to the second estimate resulted from a lower than expected consumption in airfare and recreation services.  GDP in the third quarter expanded at a 3.2% annualized rate, matching its best in three years, underpinned by robust business investment (+10.8% pace) despite the growth in consumer spending slowing from the previous quarter.  The 3.2% Q3 pace represents solid growth in the US economy, which is expected to be matched in the fourth quarter of 2018.



Other key economic data points released today included a report from the Labor Department which showed the largest weekly jump in initial jobless claims in the past three months.  The number of new claims for the week ended December 16th increased to a seasonally adjusted 245,000 (233,000 expected), up 20,000 from the previous week’s level.  The four-week moving average of claims rose slightly by 1,250 to 236,000, well below the 300,000 threshold associated with a healthy labor market.  Also detailed in the report, the number of continuing claims rose by 43,000 to 1.932 million for the week ended December 9th.



Stocks Stop Their Two Day Slide

All three major stock indices ended the day in positive territory after two consecutive days of losses, with the energy and financial sectors leading the charge.  Oil closed up 0.2% today on news of US stockpiles shrinking.  There was limited movement in foreign exchange markets with the Dollar up vs the Euro, Pound, Swiss Franc and down against the Yen, Canadian Dollar and Swedish Crown.



BOJ Stays Ultra-Loose

The Bank of Japan concluded its final policy meeting of the year with the decision to leave its existing monetary policy unchanged.  The central bank’s ultra-loose policy of a -0.1% benchmark rate and 0% target for the 10-year JGB yield has now remained the same for the entirety of 2017 as Governor Haruhiko Kuroda continues to stress the importance of inflation growth in determining policy decisions.  “Our most important goal is to achieve our 2 percent inflation target at the earliest date possible,” Kuroda stated following the decision. “We won’t raise interest rates just because the economy is improving.”  Consumer price growth in Japan has been below 1% for the past 20 months, despite continued economic growth throughout the year which reached as high as 2.5% in the third quarter.


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