This Weekly Market Update reviews the top market headlines: Fed Confirms Pivot from Monetary Stimulus, Soaring Producer Price Index Underscores Inflation Trends, Industrial Production Expansion Continues

Top Three Market Headlines

Fed Confirms Pivot From Monetary Stimulus: At its final meeting of the year last week, the Federal Reserve confirmed it will accelerate the reduction of its bond-buying stimulus measures, now expecting to end the program by March of next year. In addition, bank officials pulled forward their projections for hiking the bank's benchmark interest rate, the federal funds rate, setting the stage for up to three rate hikes in 2022. The updated plans represent a "hawkish" pivot as the Fed seeks to battle lingering inflation, with Fed Chairman Jerome Powell stating there is a "real risk that inflation may be more persistent" and that the policy change will better position the Fed to deal with that risk.

Soaring Producer Price Index Underscores Inflation Trends: The Bureau of Labor Statistics reported last week that the Producer Price Index (PPI), which reflects the prices that suppliers charge businesses, rose at a record pace in November. The index rose 0.8% from the prior month, producing a year-over-year increase of 9.6%, the largest annual gain since the index's inception in 2010. At the same time, the "core" PPI, excluding energy and food, jumped 0.7% on the month and 7.7% versus the prior year. The largest price increases were seen in iron and scrap steel, which rose 10.7% from the prior month.

Industrial Production Expansion Continues: The Federal Reserve reported last week that industrial production, which measures the output of manufacturing, mining, and utility companies, rose 0.5% in November from the prior month and 5.3% over the prior year. This followed a strong monthly gain of 1.7% in October and pushed the index to its highest level since September 2019. Meanwhile, capacity utilization for the industrial sector rose 0.3 percentage points in November to 76.8%; while this measure remains 2.8 percentage points below its long-run average, it stands at the highest level since December 2019.

As of December 20, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.53% 3.78% 15.32% 16.16%
S&P 500 -1.91% 7.60% 24.73% 25.91%
Russell 2000 -1.68% -1.16% 11.11% 10.99%
MSCI EAFE -0.46% 0.14% 8.49% 8.85%
MSCI Emerging Markets -1.76% -2.71% -3.92% -2.41%
FTSE NAREIT 0.73% 11.23% 36.98% 36.22%
Bloomberg Commodity -0.49% -4.29% 23.58% 25.51%
Barclays U.S. Aggregate 0.35% 0.23% -1.33% -1.04%

Federal Reserve 12/16/2021, 12/14/2021, WSJ 12/14/2021, 12/15/2021. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation