Fund Library News Wire
| Friday, January 12, 2018
By Mike Keerma
The major U.S. stock market gauges logged another week of gains, as
investor sentiment was buoyed by gains in the financial sector and
expectations of strong earnings growth for the fourth-quarter earnings
season, and by growing optimism about the state of the U.S. economy
following the passage of a major tax reform bill. Markets ignored an uptick
in core U.S. inflation in December, and continued their record-setting
ways, closing at fresh record highs on Friday. The tech-weighted
Nasdaq Composite Index advanced 1.7% on the week, despite an announcement from
Facebook Inc. (NASDAQ: FB) that it will favor personal over business and media newsfeeds, a move that
could hit its bottom line. Fuelled by generally ebullient investor
S&P 500 Composite Index gained 0.7% on the week. But Toronto’s
S&P/TSX Composite Index lagged, closing down 0.3% on the week, despite weekly gains in both
crude oil and
Stock markets brushed off a 0.3% month-over-month uptick in U.S. core
inflation in December, as the annualized rate of 1.8% remained below the
Federal Reserve Board’s target 2%. However, the jump in the core rate
contributed to the hike in U.S. Treasury note yields, with the 2-year note
finishing the week at 2.001%, up 4.1 bps on the week, while logging its
highest close since September 2008. In the meantime, the 10-year Treasury
ended the week with a yield of 2.551%, a gain of 7.5 bps on the week.
Bond traders have been waiting to see if the Fed’s prediction that low
unemployment rates would eventually feed through to a rising core inflation
rate. If core inflation appears to be trending closer to the Fed’s 2%
inflation target, it may give the Fed more reason to hike rates by the
second quarter of the year. Hence the rise in bond yields (and the drop in
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