This week

With the past week having ushered in December, employees up and down the county will now be counting down to that greatest of festive traditions, the office Christmas Party. Secret Santa, Christmas jumper competitions and possibly that worst trait of the office do, the tendency to talk shop, should all be taking place up and down the land over the next 3 weeks or so. Although it seems one of these traditions may have started early for market watchers, judging from the news flow this week.

Monday morning saw the Confederation of British Industry release its realised sales numbers, pointing to a darkening outlook for November. Coming in at a reading of -19 versus expectations of 2, the survey showed that retailers saw their sales volumes fall at a firm pace, with many anticipating little festive cheer for December, with a similar rate of decline expected next month.

Nowhere has this pessimism been felt more than at clothes retailer, Joules, which up until the beginning of this week was facing administration. Like many others on the high street, the chain of shops has struggled against the recent threats to spending brought about by the pandemic and the growing cost of living crisis. However news emerged that retail behemoth, Next, has come to the rescue, with a £34m package to inject new life into the troubled business. The new investment should help to keep about 100 Joules stores open and save 1,450 jobs.

From what was going on in British stores to what’s instore for US borrowing costs. Wednesday saw investors really buy into the idea that the US Federal Reserve will be slowing the pace of its rate hikes over the coming months. Confirming what most had anticipated, a keynote speech from Fed Chair, Jay Powell, cleared the path for a 0.5% rate rise, down from the 0.75% hikes over the previous few months. However, there were a number of nuances in his speech, not least the pointed assertion that officals did not want to "overtighten" policy, even if his reasoning was they wanted to keep rates higher for longer at a sustainable level.

Although it doesn’t look like the Fed will be making wholesale changes to its rates trajectory, the news was enough to see the S&P 500 immediately rise over 3%, with the US dollar faltering.

There was plenty of economic data to shop around for during the end of the week, however, it was US Non-Farm Payrolls that were firmly in the display window. The hotly anticipated US labour data showed that 263,000 Americans joined the workforce this month, well above predictions of 200,000 with average hourly earnings up 0.6%, double the forecast 0.3%. However, the discounts were kept to a minimum as money market bets still showed show an 87% chance of a 0.5% rise in December, down from 91% before the data was published.

Next week

As a full week of opening advent calendar doors is upon us, doors could well be the theme for the first half of the week as Halifax releases data on just how many have got the keys to their new house.

Detailing the change in the asking price of homes mortgaged by the provider, the data acts as the UK's earliest report on housing inflation. However the housing industry's health should not be overlooked due to the wider industry activity it can spur. The property market has a wide reaching impact on banks, mortgage providers, estate agents and even greatly impacts DIY and furniture companies who should benefit from increased activity in the sector.

The theme of housing carries on towards Thursday, as the Royal Institute of Chartered Surveyors releases its House Price Balance data. The numbers represent the percentage of surveyors reporting a price increase in their designated area, with a reading of above 0% indicating more surveyors reporting a rise in prices, below indicates more reported a fall.

Behind door number 9 next week, we will find both US Consumer Sentiment figures, as well as Producer Prices Index readings for the world’s largest economy. The two sets of data should give us a more comprehensive view of the US economy, showing us just how confident the American consumer is feeling as well as the prices wholesalers are paying to get goods on the shelves.

 

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding as at 2 December 2022.