oXYGen Financial Market Update: 12/13/24

oXYGen Insights

• Consumer Confidence Rises: The U.S. consumer confidence index climbed to a 16-month high in November, driven by optimism about the labor market, easing inflation expectations, and anticipated stock market gains. However, rising mortgage rates have curtailed new home sales, which fell sharply in October.
• Job Market Steady: The U.S. economy added 227,000 jobs in November, slightly exceeding expectations, while the unemployment rate edged up to 4.2%. Wage growth remained strong at 4% year-over-year, reflecting a stable labor market recovering from October's disruptions.
• Fed Cautious on Cuts: Fed Chair Jerome Powell signaled a slower pace for rate cuts, citing stronger-than-expected economic growth and resilient labor markets. With inflation still elevated and uncertainty around 2024 economic policy, the Fed remains deliberate as it approaches its December meeting.

What Else is in the Air

• Manufacturing Shows Modest Rebound: The ISM Manufacturing PMI rose to 48.4 in November, marking its highest level in five months but still signaling contraction. Key improvements included a rise in new orders and easing input costs, though concerns over tariffs and weak demand continue to weigh on the sector's outlook.
• October Inflation Trends: The Fed’s preferred inflation gauge, the PCE price index, rose 2.3% annually in October, aligning with expectations but higher than September's 2.1%. Core inflation remained elevated at 2.8%, driven by services costs, while consumer spending increased by 0.4% and personal income jumped 0.6%.
• Oil Prices Decline: Oil prices fell over 1% last week, driven by weak demand projections and rising U.S. production. Despite OPEC+ delaying output hikes and extending production cuts, analysts anticipate a supply surplus in 2024, adding to market pessimism.

• France’s Political Turmoil: French President Emmanuel Macron faces heightened challenges after the National Assembly ousted Prime Minister Michel Barnier, deepening political instability. Combined with Germany's coalition collapse, this instability could weaken European unity as major decisions on Ukraine and economic policy loom.
• Syrian President Overthrown: Bashar al-Assad’s regime has collapsed as rebels seized Damascus, ending his decades-long rule. While the U.S. conducted airstrikes on ISIS camps to prevent the group from exploiting the chaos, global powers call for stability amid a fragile transition led by opposition groups, including concerns over extremist factions.
• South Korea’s Political Crisis: President Yoon faces impeachment over his abrupt martial law declaration, deemed unconstitutional. The political turmoil threatens stability in South Korea's democracy, with opposition leaders pushing for swift action amidst calls for accountability.

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Summary

In the next two weeks, attention turns to the upcoming Federal Reserve interest rate decision, which could impact market expectations and economic growth. Additionally, key housing data and consumer trends as we enter the Christmas season will offer valuable insights into potential shifts in the economy heading into 2025.

Warm regards,

oXYGen Financial Team

Footnotes

• Post election euphoria lifts US consumer confidence to 16-month high (RT)
• US economy adds 227,000 jobs in November, unemployment rate rises to 4.2% as labor market rebounds (YF)
• Powell says Fed can afford to be a little more cautious (YF)
• US manufacturing contraction slows in November, outlook uncertain (RT)
• Fed’s preferred inflation gauge rises to 2.3% annually, meeting expectations (CNBC)
• Oil prices dip as extended OPEC+ supply cuts highlight weak demand (YF)
• France's toppled government adds to the European Union's bigger political problems (NPR)
• Assad is granted asylum in Russia as rebels seize control of the Syrian capital (NPR)
• South Korea’s opposition parties move to impeach president over sudden declaration of martial law (AP)