This Weekly Market Update reviews the top market headlines: Inflation Remains Elevated in December, Retail Sales Slumped in December, U.S. Mortgage Rates Rise to Near Two-Year High
  • The CPI rose 7% on an annual basis in December, the largest 12-month increase since 1982
  • Retail Sales decreased 1.9% in December compared to the prior month
  • The U.S. 30-year fixed mortgage rate hit its highest point since March 2020 at 3.45%

Top Three Market Headlines

Inflation Remains Elevated in December: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.5% in December from the prior month, slightly less than the 0.8% increase in November. On an annual basis, the CPI rose 7%, the largest 12-month increase since 1982. The "core" CPI, which excludes energy and food costs, rose 0.6% on the month, slightly higher than the prior month's 0.5% reading, and 5.5% on an annual basis, the highest rate since February 1991. The largest contributors to the December increase in the CPI included food, used cars and trucks, new vehicles, and apparel.

Retail Sales Slumped in December: The U.S. Census Bureau reported last week that sales at retail and food service establishments fell 1.9% in December compared to the prior month, the largest drop in ten months. Of thirteen measured retail categories, ten reported declines. Sales at non-store retailers, which includes e-commerce, experienced the greatest decrease in December, dropping by 8.7%. Analysts noted that sales may have been impacted by the rapid spread of the Omicron variant during the month as well as consumers having "pulled forward" holiday shopping into November amid reports of goods shortages.

U.S. Mortgage Rates Rise to Near Two-Year High: The average rate on a 30-year fixed-rate mortgage hit 3.45% last week, the highest level since March of 2020. This was the fourth consecutive week the rate has increased. The recent rise mirrors a corresponding increase in the yield on the 10-year U.S. Treasury bond, to which mortgage rates are closely tied. The 10-year Treasury yield has jumped from 1.42% on December 20th to 1.82% through the end of last week on expectations that the Federal Reserve will raise interest rates multiple times this year, possibly beginning in March, to quell inflation.

As of January 18, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.18% -1.35% -1.35% 14.20%
S&P 500 -0.29% -2.11% -2.11% 24.59%
Russell 2000 -0.79% -3.67% -3.67% 1.33%
MSCI EAFE 0.18% -0.11% -0.11% 8.01%
MSCI Emerging Markets 2.57% 2.09% 2.09% -6.29%
FTSE NAREIT -0.76% -3.90% -3.90% 39.43%
Bloomberg Commodity 2.23% 4.41% 4.41% 27.55%
Barclays U.S. Aggregate -0.29% -1.82% -1.82% -2.47%

BLS 1/12/2022, US Census Bureau 1/14/2022, CNN 1/13/2022, WSJ 1/13/2022, NAR 12/23/2021. 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