Market Perspectives (December 2012)

by Jim Baird on December 20, 2012

Executive Summary 

  • Stocks ended the month higher, after a brief correction following the presidential election results.  Domestic equities lagged international stocks in November but continue to lead on a year-to-date basis.
  • The Treasury yield curve flattened in November, although returns were limited.  Demand for yield helped to lift high yield bonds, keeping returns on par with equities year-to-date. 
  • Inflation edged up during October, as falling energy prices were more than offset by the increasing cost of food and shelter. 
  • Job market conditions improved again in November, beating expectations.  Job creation for the month was in line with its 12-month average, while the unemployment rate unexpectedly fell to 7.7%.
  • Polarization in Washington continues to make any resolution to avoid the full brunt of the fiscal cliff elusive, as the New Year rapidly approaches.

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