Daily Market Color December 21, 2015Slumping Oil Prices Set the Tone to Kick off Christmas Week Equities opened the week higher before paring some gains while oil extended its slump off the back of global supply concerns. At one point WTI crude touched below $34/barrel, its lowest price since February 2009, while Brent hit an 11-year low of $36.04. Production is running close to record highs, while global demand remains tepid due to weak growth in China and Europe. Furthermore, President Obama signed a law on Friday that ends the 40-year ban on US crude exports, which will narrow the premium of Brent over WTI. With warmer-than-expected temperatures in the US and Europe also weighing on demand, and less liquidity in the market at year end, intra-day volatility is expected to be elevated for the remainder of the year. Friday’s calendar of Fed speakers was fairly robust and there were a few notable takeaways. Fed Governor Powell said the first interest rate hike since the financial crisis should be viewed as a vote of confidence in the economy, but that the central bank could cut rates back to zero if economic conditions deteriorated. Powell also stated that now is the right time for liftoff because it allows subsequent rate hikes to be both small and gradual. San Francisco Fed President Williams reiterated that “every meeting will truly be live in terms of adjusting policy one way or the other”, but the pace of hikes won’t follow any predictable pattern. The Fed’s latest interest rate forecast calls for four hikes in 2016, so one might expect a hike every other meeting (the Fed meets 8 times/per year), but Williams said that’s not necessarily the case. He said the Fed’s decision would be data-dependent and that it won’t necessarily coincide with when Yellen is scheduled to hold a press conference afterward. It’s worth noting that the 2016 FOMC voters are considered slightly more hawkish. New voting members include Kansas City Fed President George, Cleveland Fed President Mester, St. Louis Fed President Bullard, and Boston Fed President Rosengren, all of which are considered moderately hawkish with the exception of Rosengren. There are no significant US economic data releases today.