U.S. equity markets rallied in November. The S&P 500 increased 3.70% for the month, while small cap stocks, as measured by the Russell 2000, increased by a significant 11.14%. Value stocks outpaced growth stocks. International stocks did not fare as well as domestic stocks. Developed international stocks declined 1.94% and emerging market stocks declined 4.42% as the dollar rallied sharply after the election.

Fixed income markets once again were down in November as rates increased significantly across the yield curve. The yield on the benchmark 10-year Treasury increased from 1.84% to 2.37% during the month. This is the highest yield since July 2015. The Barclays Aggregate Bond Index declined by 2.37% for the month as Treasuries declined 2.67% and investment grade bonds declined by 2.68%. Municipals declined by 3.73% in reaction to higher rates and the possibility of lower income tax rates. The Barclays High Yield Index again outperformed, declining by a more modest 0.47%.

Monthly Recap


U.S. equities moved higher in November. With the election finally (and mercifully) in the rear view mirror, investors focused on the prospects of what appears to be a more pro-business and growth-oriented executive branch. For the first time since December 29, 1999, the Dow Jones Industrial Average, NASDAQ Composite, and Russell 2000 all made new highs on November 21st. Small cap stocks had a particularly strong rally and easily outpaced large cap stocks. Value stocks outperformed growth stocks for the month.


Interest rates increased across the yield curve in reaction to the election results. The yield on the 10-year Treasury increased 53 basis points to 2.37% during the month. The Trump victory has been viewed by market participants as pro-growth and potentially leading to an increase in the deficit in the short term. Foreign selling has been cited as an additional cause of the back up in rates. Municipal bonds were particularly hard hit, though Treasuries and investment grade corporates fared only marginally better. High yield once again outperformed more interest rate sensitive fixed income sectors.


The economic momentum displayed in the third quarter continued during October. Job creation continued at a slow and steady pace, but retail sales, housing starts, existing home sales and durable goods orders all enjoyed solid growth during the month. Third quarter GDP was revised to +3.2%, which is the strongest growth since the third quarter of 2014. The Federal Open Market Committee concludes its scheduled two-day meeting on December 14th and we expect an increase in the Fed Funds rate of ¼% to be announced on that day.

Event Period Estimate Actual Prior Revised
Nonfarm Payroll Oct 173,000 161,000 156,000 191,000
Unemployment Oct 4.90% 4.90% 5.00%
ISM Manufacturing Oct 51.7 51.9 51.5
Univ. of Mich. Sentiment Nov (F) 91.6 93.8 91.6
ISM Non-Manufacturing Oct 56 54.8 57.1
Retail Sales ex Auto & Gas Oct 0.30% 0.60% 0.30% 0.50%
PPI MOM Oct 0.30% 0.00% 0.30%
PPI MOM ex Food & Energy Oct 0.20% -0.20% 0.20%
PPI YOY Oct 1.20% 0.80% 0.70%
PPI YOY ex Food & Energy Oct 1.60% 1.20% 1.20%
CPI MOM Oct 0.40% 0.40% 0.30%
CPI MOM ex Food & Energy Oct 0.20% 0.10% 0.10%
CPI YOY Oct 1.60% 1.60% 1.50%
CPI YOY ex Food & Energy Oct 2.20% 2.10% 2.20%
Industrial Production Oct 0.20% 0.00% 0.10% -0.20%
Housing Starts Oct 1,156,000 1,323,000 1,047,000 1,054,000
Building Permits Oct 1,193,000 1,229,000 1,225,000
New Home Sales Oct 590,000 563,000 593,000 574,000
Existing Home Sales Oct 5,440,000 5,600,000 5,470,000 5,490,000
Leading Index Oct 0.10% 0.10% 0.20%
Durable Goods Orders Oct (P) 1.70% 4.80% -0.30% 0.40%
S&P CoreLogic CS 20-City YOY Sep 5.20% 5.08% 5.13% 5.06%
Personal Income Oct 0.40% 0.60% 0.30% 0.40%
Personal Spending Oct 0.30% 0.10% 0.30% 0.50%
GDP Annualized QOQ 3Q (S) 3.00% 3.20% 2.90%
F = Final; P = Preliminary; S = Secondary

Click here for a PDF of Glenn Dorsey’s Monthly Recap

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