December 18th, 2013 9:29 AM by Mel Samick
The stock markets seemingly did not have much fun, though. U.S. stocks made a mild rebound last Friday but ended the week lower, as investors looked toward a Federal Reserve meeting this week that could start the curtailment of the Fed's equities-boosting stimulus program. The Dow Jones Industrial Average added 15.93 points, or 0.1 percent to 15,755.36 but was 1.7 percent lower over the week. The S&P 500 closed down 0.18 point at 1,775.32, and finished the week with a 1.7 percent loss. Both indexes were down for the second week, the first series of such losses since early October. For investors though, there might be a desire to lock-in this year's stellar gains. Following its record close on Monday, the S&P 500 stood nearly 28 percent above its level at the start of the year, which would be its strongest annual performance since 1997, if it holds through December.
The bond markets saw the U.S. Treasury yield curve flatten somewhat as investors digested generally strong economic data and looked for signs of the Federal Reserve's tapering intentions. Shorter-term Treasury yields edged higher, and long-term yields moved slightly lower. The two-year government budget agreement reached by legislators caused some weakness in the Treasury market midweek. Investors viewed the deal as potentially giving Fed policymakers more confidence to reduce the pace of the Central Bank's asset purchases. A 10-year Treasury note auction that saw relatively weak demand also contributed to the midweek Treasury selling. However, Friday's data showing that Wholesale Prices unexpectedly declined in November helped longer-term Treasuries recover.
Meanwhile, in the housing sector, the Federal Housing Finance Agency (FHFA) came out with an announcement of an overall G-Fee increase for 2014. FHFA expects a combination of increases and decreases to produce another net G-Fee increase which will ultimately translate into a higher cost for the borrowers. So much for an accommodative housing policy.
Information Provided by NYCB Capital Markets