FED Rate Hike at 0.5%

On Wednesday UK’s ILO (International Labor Organization) 3-months unemployment rate was released, coming out at 5.2% with a previous reading of 5.3%. Job claims count went up in the month of November with 3.9K, reaching 0.796 million. The wage growth reaches half of its pre-crisis value, slowing to 2.4% from an earlier 3%.

The US housing stats also came out on Wednesday with an increased figure month-on-month to 1.173 million in November, surpassing October’s 1.06 million. On the same page, building permits went up with a little over 1.61 million since last month, reaching 1.289 million. Both housing stats and building permits were above their expected values.

[Tweet “UK Job claims count went up in  November with 3.9K, now 0.796 million”]

The most important piece of news from Wednesday is Fed’s rate hike which moved the interest rate with 0.25% up, going from 0.25% to 0.5%, “ending an era” as per Yellen’s words and changing the monetary policy rate the first time since 2006. In her statement, Yellen also declared that this decision shows confidence in the economy’s capacity to continue its growth and improvement, saying that the rate hike was a moderate one and further policy actions will hinge on the economy’s pace. There still exists a slack in the labor market and the consumer prices growth can be only transitory due to the seasonal fluctuations. On the long term, Yellen announces a fund rate rise in the end of 2018 at a long-run level.

Still in the US, Thursday brings us the retail sales release. The MoM (month-on-month) figure went up 1.7% in November, over market expectations and also higher than October’s 0.6% decline.  YoY (year-on-year), the figure increased with 5.0% compared to November 2014, the 31^st consecutive growth month being recorded in November 2015. The average store prices reading showed a fall by 3.3% in November 2015 versus November 2014 and marking the 17^th consecutive month of YoY price reduction. Spending in the retail sector though increased 1.4% last month compared to 2014’s same month. According to the December Manufacturing Business Outlook Survey made by the Philadelphia Reserve Bank, the manufacturing conditions for the region attenuated in the present month, the survey’s indicator for general activity falling under 0 meaning a decrease from November’s 1.9 to -5.9. This is the third negative reading recorded in the last 4 months.

The yellow metal retraced yesterday to $1,048/ounce, closing in on the low of December, 3^rd at $1,046.18/oz. If we consider this as a support line, the price is most likely to drop below it, pushing back.