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Weekly Market Update – December 30, 2016

The Dow was down 57 points on Friday after the investors were digesting the large market move since the election. For the week the Dow was down 0.9%. Year-to-date the Dow is up 13.4%.

U.S. Treasuries yields rose from a record low earlier this year as market expectations shifted towards stronger growth, higher inflation and a faster pace of interest rate increases by the Federal Reserves. The expected expansionary fiscal policy and lighter regulations proposed by President-elect Donald Trump also contributed to higher interest rates. The yield on 10-year Treasury note closed the year at 2.4%. Our preferreds ended the year substantially outperforming the Barclay’s Aggregate Bond Index.

Consumer confidence for December rose to 113.7, ahead of the 108.2 consensus estimate and up from 109.4 in November. It was the strongest reading since 2001 and came after a steep rise in November. The post-election surge in optimism was most pronounced among older consumers. November pending home sales fell 2.5% vs. a consensus 0.4% gain. The index is now down 0.4% year over year and at its lowest level since January. The sharp rise in mortgage rates, along with low inventory, discouraged would-be buyers. National Association of Realtors’ chief economist said higher borrowing costs cloud the outlook for 2017.

The price of crude oil was 1.5% higher this week, on pace for its biggest annual gain since 2009, up about 45% year-to-date. Saudi Arabia and its OPEC allies pledge to cut output has fueled a gradual rally since this agreement. Skepticism of OPEC’s commitment and worries over U.S. companies continuing to drill have prevented oil prices from reaching higher, as most market watchers are waiting to see the production reports for the first few months of 2017.

Our office and the market will be closed Monday, January 2 in observance of New Year’s Day. Next week’s economic calendar highlights include Construction Spending (Jan. 3), Crude Inventories and Auto Sales (Jan. 4), Initial Jobless Claims (Jan. 5), and Nonfarm Payrolls (Jan. 6). Among these, the Non-farm Payrolls will have the biggest impact on the market. Corporate earnings for Q4 will start in the week of January 9th.

Have a great weekend and Happy New Year!

Yansong Pang



Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464