This week will be very active, with the Federal Reserve (Fed) meeting for the final time in 2016 and significant economic data releases—all of which will be closely scrutinized given the stock market hitting all time highs.
While the odds of a Fed interest rate increase is almost certain at this point, the language in their press release and post-meeting press conference will receive plenty of attention. The Fed will be looking to strike the right balance on the continued economic improvement, while trying to avoid getting pulled into the changing political landscape in Washington. Stay tuned on Wednesday at 2:00 pm EST to see how this all plays out.
On the economic data front, this is the last full week of meaningful U.S. economic data until the New Year. This week, we get November readings on retail sales, Consumer Price Index (CPI) and industrial production. I expect the data to reinforce the improvement in consumer sentiment and an uptick in inflationary pressure.
So what does all this mean for the markets? Stocks will most likely continue to make new highs as fund flows and repositioning by active managers push prices higher. I expect interest rates to continue to move higher and oil prices to rise. My current opinion is that the market moves we have seen since the election will likely continue until at least Inauguration Day on January 20th. That being said, I am starting to look at the possibility of reducing positions in equities around that time.
< Go to Monday Morning Perspectives
This blog post is for informational use only. The views expressed are those of the author(s), 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.
