This Weekly Market Update reviews the top market headlines; Inflation Remains Restrained Through January, Small Business Optimism Trends Down, U.S. Budget Deficit Surges in January
  • The U.S. CPI rose a seasonally adjusted 0.3% in January from the prior month
  • The NFIB Small Business Optimism Index decreased to 95.0 in January
  • The U.S. budget deficit was $165 billion in January

Top Three Market Headlines 

Inflation Remains Restrained Through January: Official U.S. inflation gauges remained in check during the month of January, as evidenced by relatively modest readings for the consumer-price index (CPI). The broad CPI rose in the month by a seasonally adjusted 0.3% versus December, or 1.4% on an annual basis. While relatively subdued, the 0.3% monthly increase marked the fastest rate-of-change in five months, driven mainly by rising oil and gas prices. In contrast, the less volatile core CPI, which excludes the effects of food and energy prices, was flat versus December, while also rising 1.4% over the prior year. The annual pace of gains remains below the Federal Reserve’s 2.0% target for now.

Small Business Optimism Trends Down: Optimism among U.S. small business owners continued to wane in January, according to the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index, which is based on surveys of small business owners, dropped to 95.0 in January, down from 95.9 the prior month and below the recent cycle high of 104.0 in October. Of the 10 components that make up the index, four declined from January, including future sales expectations and earnings trends. Notably, the percentage of owners expecting better business conditions over the next six months fell to the lowest level since November 2013.

U.S. Budget Deficit Surges in January: The U.S. federal budget deficit increased sharply in January, reaching a total of $165 billion, according to the Congressional Budget Office. For comparison, the January 2020 budget deficit was only $33 billion. The deficit over the first four months of the 2021 fiscal year, which began Oct. 1, totaled $738 billion, 90% higher than the same period in the prior year. The significant increase in January stemmed largely from the $900 billion Covid-19 relief bill that Congress signed into law at the end of 2020, which included $142 billion in stimulus checks.

 

As of February 12, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.76% 5.67% 5.67% 19.40%
S&P 500 1.28% 4.94% 4.94% 18.56%
Russell 2000 2.54% 16.01% 16.01% 37.33%
MSCI EAFE 2.09% 3.78% 3.78% 11.57%
MSCI Emerging Markets 2.41% 10.78% 10.78% 31.59%
FTSE NAREIT 2.03% 5.59% 5.59% -6.90%
Bloomberg Commodity 1.93% 7.71% 7.71% 12.09%
Barclays U.S. Aggregate -0.13% -1.23% -1.23% 4.44%

CNBC 2/10/2021, NFIB 2/9/2021, WSJ 02/08/2021 FactSet. 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.