Tuesday December 13

Stocks today rose as the Fed looks to raise interest rates tomorrow. The S&P 500 rose 0.7% to 2,271 and the Dow Jones rose 0.6% to 19,911. The Dow is inching closer to the 20,000 level. The KBW Bank index today rose 0.1% while Utilities rose 1.1%. Economic data today showed that small business optimism rose more than expected. Additionally data showed that import and export prices both fell on the month. It is a near certainty that the Fed will raise interest rates tomorrow, but investors will be looking more closely at the Fed’s forward guidance. Any hint that the Fed may raise rates at a steeper trajectory than anticipated could lead to a further bond selloff. The dot plot will provide clues on that. The two year Treasury yield rose 2bp to 1.16% and the 10 year fell 1bp to 2.47%. On that backdrop 2yr vs 10yr flattened to 1.31%. The dollar was mostly stronger today as some investors believe the Fed will take a hawkish stance tomorrow. USD rose 0.1% against EUR to $1.0626. USD rose 0.1% against JPY to Y115.18. USD rose 0.1% against GBP to $1.2660. Oil prices fell somewhat but still remain elevated. WTI fell marginally to $52.82 while Brent lost 0.2% to $55.59.

Tuesday December 13

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