Market Commentary – 12/4/15

Friday’s rally was a welcomed relief for U.S. equities and a better than fair day for U.S. bonds after a tough week for both stocks and bonds. The November Employment Report released early Friday confirmed that the U.S. economy is still recovering with 211,000 new jobs created in November. With the employment coming in above expectations, a Fed rate hike later this month is all but certain. What the Fed does after the initial lift off from zero is anyone’s guess, but be prepared for a ¼% raise in the overnight rates later this month. The smart money has already factored this pricing in so the adjustment in the marketplace should be muted when the Fed actually announces the rate hike.

A rough sell-off mid-week is a good reminder that with rates still at historical lows, locking in your loan is a very prudent practice in the current market. However, with bonds trading well today, we are biased toward cautiously floating interest rates into next week.