US equity market hits a new record high

Just after I sent the News yesterday (The year 2021 in 10 charts…), I was already regretting not highlighting the new performance of the equity market, especially in the US. The S&P 500 hit a new record yesterday and may end the year with a 30% gain. Its outperformance of the global index is the strongest in 20 years, according to Bloomberg (I confess I didn’t check…).

The US economy is ending the year on a high note, as confirmed by the indicators published yesterday: durable goods orders and new home sales up, household confidence rebounding, jobless claims very low. The Atlanta Fed estimates Q4 US GDP growth at +7.6%. The only problem is that consumption remained dynamic in value terms in November but stagnated in volume terms, due to the acceleration in prices, of course. The core PCE deflator, which is the measure of inflation that the Fed looks at, shows a year-on-year increase of 4.7%, the highest since 1989! For the equity market, the question is whether the Fed will be able to calm these tensions without excessively raising rates, as the bond market believes. The US 10-year rate is timidly approaching 1.5% and the EUR/USD exchange rate is stable above 1.13.

That was the last Daily of the year. It remains for me to wish you a very happy holiday season and see you on 3 January 2022!