US equities continued their bull run this week with the Dow Jones Industrial Average reaching a record high of 16,000 as data on inflation and the labor market eased fears the Federal Reserve could be ready to start winding down its stimulus program.
Tuesday, November 19
Ben Bernanke said that benchmark interest rate will probably be maintained close to zero for a "considerable time" even after bond purchases end. He has reiterated in the past that the Fed would not consider raising rates while unemployment was above 6.5% and inflation was near 2%. Bernanke in his speech emphasized these were thresholds, not triggers, meaning that hitting the targets would not automatically cause rate increases but were a necessary level for rates to rise. He also backed the Fed's decision of quantitative easing by stating that labor market in the United States has demonstrated "meaningful improvement", since the monetary stimulus program started.
Wednesday, November 20
US CPI dipped 0.1% in October, mainly due to a fall in petrol prices. In the 12 months through October, CPI increased 1% — the smallest gain since 2009 and well below the Fed's target inflation rate of 2%.
US Retail Sales:
US retail sales increased 0.4% in October, up from a flat reading in September, as consumers shrugged off the partial government sundown and spent more on autos, clothing, and furniture.
US Existing Home Sales:
US existing home sales fell 3.2% in October to a seasonally adjusted annual pace of 5.12 million, the slowest place since June 2013. Home sales suffered mainly due to inventory shortage and high property prices that dampened buying power.
US Crude Oil Inventories:
US crude oil inventories increased by 375K barrels, below expectations for an increase of 900K barrels for the week ended November 15,2013.
The Federal Reserve decided to keep its bond buying unchanged, but policymakers said they anticipate the tapering process to begin in the next few months. The minutes also revealed discussion about how to begin the taper process without spooking the markets.
HSBC Flash Manufacturing PMI:
HSBC flash PMI fell to 50.4 in November from a seven-month high of 50.9 in October, indicating slower growth in Chinese manufacturing activity.
Thursday, November 21
US producer price index fell 0.2% in October mainly due to a decline in oil prices. Year-over-year, the producer price index rose at an annualized rate of 0.3% in October, in line with expectations, and unchanged from September.
US Unemployment Claims:
Unemployment claims fell 21K to a seasonally adjusted 323K vs. expectations of a decline to 344K for the week ended November 16, 2013.
Philly Fed Manufacturing Index:
Philadelphia Fed's manufacturing index, a gauge of regional manufacturing growth, slowed to a reading of 6.5 in November from 19.8 in October. The reading was well below expectations of 14.5, which increased fears of weak economic growth.
Friday, November 22
Canada's core CPI increased by 1.2% on a year-over-year basis in February matching expectations, but well below the Bank of Canada's inflation target of 2%.
Canada Core Retail Sales:
Canadian core retail sales remained unchanged in October vs. expectations for a rise of 0.4%.
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