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Events that marked the week:

Wednesday brought Retail Sales, Industrial Production and PPI figures. Sales at U.S. retailers rose less than forecast in November, representing a pause in spending after robust gains in the previous two months. The 0.1 percent advance followed a revised 0.6 percent increase in the prior month that was smaller than initially reported, Commerce Department data showed Wednesday. The median forecast in a Bloomberg survey called for a 0.3 percent gain.

The Producer Price Index for final demand increased 0.4 percent in November, seasonally  adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in October and advanced 0.3 percent in September. On an unadjusted basis, the final demand index climbed 1.3 percent for the 12 months ended November 2016, the largest rise since moving up 1.3 percent for the 12 months ended November 2014.

 

Separate report showed that production at factories, which make up 75 percent of all output, fell 0.1 percent, a Federal Reserve report showed Wednesday. The median forecast in a Bloomberg survey called for a 0.2 percent drop. Total industrial output, which includes mines and utilities, decreased 0.4 percent, the biggest decline since March, as utility use slowed with warmer-than-usual temperatures.

 

However the focus of the session was on Fed interest rate decision, Federal Reserve officials raised interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017, saying inflation expectations have increased “considerably” and suggesting the labor market is tightening. The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 0.75 percent, effective December 15, 2016.

 

The central bank said monetary policy supports “some further strengthening in labor market conditions and a return to 2 percent inflation,” adding the word “some” in an indication that officials see less room for improvement in the job outlook. The word “strengthening” also replaced “improvement.”

 

On Friday Housing Starts and Buliding Permits figure were released. New-home construction in the U.S. fell more than forecast in November after surging a month earlier to a nine-year high, indicating fitful progress in residential real estate. Residential starts slumped 18.7 percent to a 1.09 million annualized rate last month after rising to a 1.34 million pace, Commerce Department data showed Friday. The median projection in a Bloomberg survey called for a 1.23 million pace in November. Ground-breaking jumped 27.4 percent in October, the most since July 1982.

 

Permits, a proxy for future construction, also fell last month on fewer applications to build apartments. Permits dropped 4.7 percent to a 1.2 million annualized rate, reflecting a 13 percent slide in applications for multifamily dwellings. Permits for one-family homes climbed 0.5 percent, the fourth straight gain.

 

Thursday was marked by CPI, Unemployment Claims, Philly Fed Manufacturing Index and Empire State Manufacturing Index figures. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent  in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics  reported today. Over the last 12 months, the all items index rose 1.7 percent  before seasonal adjustment. The shelter and gasoline indexes continued to rise in November, and were again  the main reasons for the seasonally adjusted all items increase. The shelter index advanced 0.3 percent in November, while the gasoline index increased 2.7 percent.

 

Separate report showed that in the week ending December 10, the advance figure for seasonally adjusted initial claims was 254,000, a decrease of 4,000 from the previous week's unrevised level of 258,000. The 4-week moving average was 257,750, an increase of 5,250 from the previous week's unrevised average of 252,500. There were no special factors impacting this week's initial claims. This marks 93 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

 

The index for current manufacturing activity in the region increased from a reading of 7.6 in November to 21.5 this month. Nearly 34 percent of the firms reported increases in activity this month, compared with 24 percent last month. The general activity index has remained positive for five consecutive months, and the activity index reading was the highest since November 2014.

 

Separate report showed that business activity grew modestly in New York State, according to firms responding to the December 2016 Empire State Manufacturing Survey. The headline general business conditions index climbed eight points to 9.0. The new orders index rose to 11.4, and the shipments index was unchanged at 8.5.

 

This week markets will be looking at:

 

Existing Home Sales (Wednesday 16:00)

Durable Goods Orders (Thursday 14:30)

Final GDP (Thursday 14:30)

Unemployment Claims (Thursday 14:30)

New Home Sales (Friday 16:00)

Revised UoM Consumer Sentiment (Friday 16:00)

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