2022 Comes To A Close

MACRO MARKETS 

The big macro number we had recently was PCE. It is the most closely watched number by the Fed probably after wage growth now. The PCE (personal consumption expenditures) price index rose 0.1% on the month. The PCE inflation rate continued to ease from June's 40-year high of 7%, slipping to 5.5%. Core prices, minus food and energy, rose 0.2% on the month as the annual core inflation rate eased to 4.7%. Market had expected a 0.2% increase in the PCE price index and a 0.2%, with an overall 5.5% inflation rate and 4.6% core rate.

The US Durable Goods Orders have contracted by 2.1% against the consensus of a 0.6% contraction. A decline in demand for Durable Goods indicates a further drop in the core inflation measures as a slowdown in demand is critical for softening inflation in the economy.

Nothing has really changed overall since Powell to warrant any serious change in the macro environment. We will wait for the Non-Farm Payrolls on the first Friday of January to set the pace and build towards the 2023 macro thesis.

Until we get NFP next month the February pricing for hikes is in flux and can change drastically depending on how much the numbers shocks. We will dive deeper into NFP in the next newsletter.