It was another good week for economic news. Consumer confidence rose slightly, along with both personal income and spending. We did see a slowdown from last month, but that is a good thing. Slowing but sustainable growth is just where we want to be to keep pulling inflation down—and that is just what last week’s data told us.
For markets, it wasn't a good week—it was a great one. November ended with the strongest monthly performance for decades. U.S. markets were up 9 percent to 11 percent, international markets were up in the high single digits, and even fixed income notched gains of almost 5 percent. Everything was up.
So, why was this? It was all about interest rates, again. With inflation down as we discussed earlier and with signs the economy is slowing, markets are now pricing in rate cuts next year. This is pulling long-term interest rates even lower. The yield on the 10-year U.S. Treasury is now back down to August’s level. Lower rates typically mean higher stock valuations, which is just what we are seeing. And that looks likely to continue.
With the fundamentals solid, we also have good seasonal factors as strong years tend to end on a positive note. That is a good place to be as we all start our holiday shopping.
Have a great weekend!