The U.S. stock market ended the week higher after being propelled by the news that a trade deal between the U.S. and China is in the works. Interest rates were little changed on the week with the 10-year Treasury yield dropping from 1.84% to 1.82%. The spread between the 10-year treasury yield and the 2-year treasury yield continues to widen but still remains relatively narrow at 0.21%. The price of gold rose 1.5% to $1,480 an ounce amid the Fed’s decision to leave interest rates unchanged. The price of crude oil rose 1.2% to $59.78 a barrel as it was also propelled on the U.S. and China trade news.

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This Week's Economic Highlights

• The consumer price index (CPI), a measure of retail inflation, rose by a strong 0.3% in November after rising 0.4% the month prior. As a result, CPI’s trailing 12-month rate of change increased from 1.8% to 2.1%, its highest in a year. Core CPI, which excludes the volatile food and energy prices, rose by 0.2% in November and 2.3% over the past 12-months.
• The Federal Open Market Committee (Fed) unanimously voted to leave the Fed’s Funds Rate unchanged at the 1.5% to 1.75% range. The Fed also signaled that they plan to leave rates unchanged through the end of 2020 as they are more upbeat on the economy. Fed Chairman Jerome Powell said he would need to see a sustained increase in inflation before raising rates again.
• After approaching a near-historic low last week, initial unemployment claims soared by 49,000 for the week ending December 7th to a 2-year high of 252,000. Much of the unexpected rise can be attributed to the later than usual Thanksgiving holiday instead of rising layoffs. The Thanksgiving holiday, which falls in different weeks each year, appears to have thrown off the government’s process of adjusting jobless claims for seasonal swings in employment. That said, the more stable and likely more reflecting, the four-week average of initial claims only rose 6,250 to 24,000.
• The producer price index (PPI), a measure of wholesale inflation, was unchanged in the month of November, after jumping 0.4% the month prior. However, over the past year, PPI has risen by only 1.1%, its lowest in nearly three years.
• Retail sales rose by a slight 0.2% in November as a later than usual Thanksgiving pushed cyber Monday into December. If automobiles (which have inconsistent month-to-month demand) were removed, retail sales would have been virtually flat as the rest of the retail industry lags behind.

“The dice have no memory.  The coin can’t recall the last toss.  And the stock market doesn’t care about your investment history.” – Johnathan Clements