10 Things You Need to Know: December 31, 2024
Key data releases this week include: pending home sales (Mon), FHFA Housing Price Index (Tue), construction spending (Thu), and ISM Manufacturing (Fri).
Haver, Bloomberg
December 30, 2024
The Pending Home Sales Index rose 2.2% m/m (6.9% y/y) to 79.0 in November on top of increases of 1.8% in October. Economists had expected a gain of 0.8%. The November reading was the fourth consecutive m/m rise and the highest PHSI level since February 2023. Nevertheless, the PHSI had fallen 38.3% since its August 2020 peak of 128.0.
Bloomberg
December 24, 2024
The Stoxx 600 has gained 5% this year, badly lagging a 25% advance by the S&P 500. Stimulus announcements have failed to sustainably lift the mood as investor worries shifted to concern about higher US tariffs. Recent surveys from BofA showed investors are the most underweight European stocks in over two years, while exposure to the US is at an all-time high.
Barron’s
December 30, 2024
At first glance, it would seem that Jerome Powell & Co. are siphoning funds from the economy as they shrink their assets from a peak of about $9 trillion to under $7 trillion. But the decline in one of the Fed’s liabilities—so-called reverse repurchase agreements —has pumped in over $2 trillion. The drawdown of another Fed liability—the Treasury’s general account—will provide more fuel for the markets starting after the turn of the year.
Barron’s
December 30, 2024
New voting members of the Federal Open Market Committee could help tilt the Fed’s policymaking body in a more hawkish direction next year. Joining the FOMC voters in 2025 will be Boston’s Susan Collins, Chicago’s Austan Goolsbee, St. Louis’ Alberto Musalem, and Kansas City’s Jeffrey Schmid. Goolsbee was an alternate voter on the FOMC’s July decision.
Barron’s
December 30, 2024
The champion stock market this year by a long way was Argentina, whose Merval index nearly tripled in value. Argentina and Turkey were those bets in 2024. Argentine President Javier Milei took over a basket case in December 2023. His budget-slashing shock therapy tamed hyperinflation and built up currency reserves, without the widely feared rioting in the streets.
Barron’s
December 30, 2024
Twenty percent of American adults under age 42 own cryptocurrency, according to a Policygenius survey from earlier this year. Social media is full of investors who have liquidated their IRAs (or their parents’) and poured proceeds into Bitcoin.
Capital Economics
December 23, 2024
We have raised our forecast for the terminal fed funds target range, to between 3.75% and 4.00%, with one 25bp cut in March and a final one in June. With the economy continuing to perform well and the labor market normalizing rather than collapsing, there are still some upside risks to that forecast, particularly if Trump were to impose tariffs sooner than we assume.
The Associated Press
December 27, 2024
The US may need to implement “extraordinary measures” to prevent the country from reaching the debt ceiling as soon as Jan. 14, according to Treasury Secretary Janet Yellen. Yellen called for “Congress to act to protect the full faith and credit of the United States.”
FTI
December 24, 2024
U.S. companies are now defaulting on junk loans at the fastest rate in four years. Specifically, the default rate in the leveraged loan market, the bulk of which is in the U.S., rose to 7.2% in October. Many companies that have been refinancing low-yielding loans are increasingly struggling to pay higher interest rates. Since banks are notorious for selling these leveraged loans to private credit firms, the possibility of a major default in the $2 trillion private credit industry is rising fast.