Markets Prepare For "Lift Off"

December 7, 2015

Markets Prepare For

A relatively eventful market week was culminated with the November employment number, which exceeded expectations. The continued strength in the jobs market, and the equity market’s rally last Friday, indicates the market is ready and prepared for the Federal Reserve (Fed) to raise interest rates after seven years with a zero interest rate policy.

November employment was a robust 211,000 and October's number was revised higher, from 271,000 to 298,000, marking the strongest two months of payroll gains this year.

Leading up to the Fed meeting on December 16, we expect to experience continued choppy market action but don't anticipate a breakout move for either stocks or bonds. For short-term traders, the range will be wide enough to take advantage of oversold and overbought conditions, but for investors, the fundamental cross-currents should keep the markets in a reasonably tight trading range for the remainder of the year.

Keep an eye on Janet Yellen and the other Fed governors’ guidance around the expected pace of tightening relative to market consensus. Be on the lookout for a clear indication around forward inflation expectations, which we expect to remain subdued.

Tags: Monday Morning O'Malley | Federal Reserve | Employment numbers | Janet Yellen

< Go to Monday Morning O'Malley

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications