Weekly Wrap-Up

Last Week In Markets: Dec 13 - Dec 17 2021

Fisher Investments recaps the biggest market, political and economic news from last week including US, UK and eurozone central bank policy decisions, US, UK, eurozone and Japan PMI readings, US, eurozone and China retail sales figures.

In the US, the December Markit Flash Manufacturing and Services Purchasing Managers’ Indexes (PMI) fell to 57.8 and 57.5, respectively—both missing expectations but remaining expansionary (readings over 50 indicate expansion). November retail sales increased 18.2% y/y, beating estimates, but rose 0.3% m/m, less than anticipated. November industrial production rose 0.5% m/m, lower than expected. November manufacturing production expanded 0.7% m/m, in line with estimates. The Fed announced it will accelerate winding down—or “tapering”—its quantitative easing (QE) bond purchases and also signaled it is considering interest rate hikes as early as next year. In our view, potential rate hikes aren’t inherently bullish or bearish for stocks. Like every monetary policy decision, whether they are a net benefit or detriment depends on market and economic conditions at the time. For more, please see our 12/15/2021 commentary “2018 Doesn’t Prove Rate Hikes Are Bad for Stocks.”

In the eurozone, December Markit Flash Manufacturing and Services PMIs fell to 58.0 and 53.3, respectively. November core consumer prices (excluding food and energy) rose 2.6% y/y, in line with estimates. October industrial production rose 3.3% y/y slightly beating expectations. In the UK, the December Markit/CIPS Flash Manufacturing and Services PMIs decreased to 57.6 and 53.2, respectively. November core consumer prices rose 0.7% m/m and 4.0% y/y—both higher than estimates. November retail sales increased 4.7% y/y. The Bank of England (BoE) voted to slightly increase interest rates to 0.25%, citing inflation pressures. The European Central Bank decided to phase out its emergency QE program but expand its separate, longer-term QE program—with the net effect of reducing monthly QE purchases from €80 million to €40 million over the next four months. For more on the BoE and ECB announcements, please see our 12/16/2021 commentary “Monetary Policy’s Big Week Continues.”

In Japan, the December Jibun Bank Flash Manufacturing and Services PMIs were 54.2 and 51.1, respectively—both missing consensus estimates. Preliminary November exports and imports rose 20.5% y/y and 43.8% y/y, respectively. October industrial production fell 4.1% y/y. In China, November retail sales rose 3.9% y/y, lower than expected. November industrial production rose 3.8% y/y, in line estimates.

The Week Ahead:

The US and eurozone announce their third estimates of Q3 2021 GDP. The UK releases October industrial productions figures. Japan reports November bank lending. China reports November inflation and trade data.

Tip of the Week:

Fisher Investments’ offices and US markets will be closed on Friday, December 24 in observance of Christmas. We wish you and your families a safe and enjoyable holiday season!