Editor
A better than expected retail sales and the lowest mortgage rate level since August lift investors hope for an end to the Fed tightening monetary policy.
Finlay It looks like the interest rate series is coming to an end. Investors’ hopes of a monetary policy tightening policy just increased due to better-than-expected retail sales reports and declining mortgage rates. Before moving on to today’s strong data from economic reports and Wall Street gains, early indications suggest that the U.S. Fed might add extra interest rates next year. Yet the economic data suggest otherwise, starting with a strong nonpayroll framework report, the best quarterly earnings report since 2020, and a focus on revenue section sales.
Now, back to November’s retail sales report. Defying Marlt’s explanation of retail sales rising by only 0.1%, U.S. retail sales jumped by 0.3% last month. On top of that, every year, retail sales have jumped by 4.1% since November 2022. As for online retail sales, the report signals a 0.1% increase. Electronics and appliance sales declined by 1.1%, possibly due to discounting, as reflected in the consumer inflation report. Building material and garden equipment sales slipped by 0.4%, while gasoline station receipts fell by 2.9%.
The market’s resilience is showing signs of fast recovery despite market concerns about a recession. The Commerce Department’s report signals a strong start to the holiday shopping season with deep discounts, easing concerns of a recession. Consumer resilience is attributed to a robust labor market, challenging financial markets’ expectations of an early rate cut in March.
With the mixed and high prices of gasoline, most retailers offer discounts, which in turn encourage customers to spend more.
On the second piece of economic news, mortgage rates fell to their lowest level since August. Mortgage rates have been increasing like a crazy horse in the past few months due to the increasing market uncertainty, which escalated due to the mortgage tightening policy.
The average interest rate on a 30-year fixed-rate mortgage in the U.S. dropped below 7% for the first time since August. According to a Freddie Mac survey released on Thursday, the average contract rate fell from 7.03% to 6.95% in the current week. Marketers see that the significant decline in mortgage rates was attributed to the Fed considering an interest rate cut pause this month or that the cancellation will end at last.
Since reaching 8% in October, home loans have continuously fallen as yields fell too. Moving to reach their lowest level since last July. Since speaking about reaching their lowest level Mortgage payments are also at their lowest since April, with the median U.S. mortgage payment reported as $2,503 for the four weeks ending Dec. 10, down $233 from October’s record high.
Meanwhile, on Wall Street, the S&P 500 benchmark is up by 0.58%, and both the tech-heavy Nasadq and Dow futures climbed by 0.52%.
Still, the hope of pausing interest rate hikes is uncertain, which could change. In fact, according to economic projections, the U.S. central banks will more likely add three more interest rate hikes in different sessions. But the amount will be the same as the past two hikes—a quarter base point interest rate hike, to be accurate.
