US Stock Market Momentum Positive Despite Yellen Testimony

ETF Market Commentary

In prepared testimony before the JEC (Joint Economic Committee) of Congress, Fed Chair Yellen confirmed a bias towards tightening monetary policy at the central bank’s upcoming December meeting. She also indicated her intention to serve until the expiration of her term in 2018, thus giving more time to clearly assess the impact of any forthcoming fiscal stimulus package under President-Elect Donald Trump.

Today’s economic news was consistent with a data dependent Fed’s prevailing view that a return to normalization is still warranted.

• Real Estate / Residential: In October-2016, Housing Starts  @ 1.323m vs estimates @ 1.168m and prior revised @ 1.054m. Housing Permits  @ 1.229m vs estimates @ 1.19m and prior @ 1.225m.
• Inflation / Consumer: October-2016’s CPI m/m @ 0.4% vs estimates @ 0.4% and prior @ 0.3%, while yr/yr @ 1.6% vs. prior @ 1.5%. Ex food & energy m/m @ 0.1% vs estimates @ 0.2% and prior @ 0.1%, while yr/yr @ 2.1% vs prior @ 2.2%.
• Labor / Unemployment: For the week of Nov-12-2016, Unemployment Claims @ 235k vs estimates @ 257k and prior @ 254k. 4-Week Moving Average @ 253.5k vs prior @ 259.75k.
• Business Sentiment: Philly Fed Business Survey Outlook for November-2016 @ 7.6 vs. estimates @ 8.0 and prior @ 9.7.

Elsewhere, global economic data out of Europe (ex UK) was somewhat less encouraging.

• UK / Retail Sales: For October-2016, actual @ 1.9% vs. estimates @ 0.4% and prior revised @ 0.1%.
• Europe / Inflation: The HICP (Harmonized Index of Consumer Prices) in October-2016 @ 02% m/m vs estimates @ 0.3% and prior @ 0.4%. Yr/yr @ 0.5% vs estimates @ 0.5% and prior @ 0.4%.
• Central Banks / ECB Minutes: The October-2016 meeting revealed lingering concerns for the EU,which are moderate growth subject to downside risks, weakness in wages and underlying inflation. The bank believes that more time is need for its accommodative efforts to take effect.