December and 2016 in Figures
December 31, 2016
Although the federal funds rate was raised three fewer times in 2016 than many U.S. monetary officials were expecting a year ago, short-term interest rate differential moved significantly more in favor of U.S. assets over the course of the year. This shift was reflected in 10-year bond yield spreads between the United States and both Europe and Japan where rates fell.
Comparatively small net dollar yearend to yearend changes vis-a-vis most of the currencies shown below masked volatility during the year. Sterling sold off after the unexpected Brexit vote in June to leave the European Union, but the dollar rallied following the equally unexpected election of Donald Trump as America’s 45 president in November. Trump has insinuated he may have the Chinese government declared a currency manipulator. Despite China’s trade surplus, the dollar rose 7.0% against the yuan in 2016 after notching a 4.6% advance in 2015.
2016 was another good year for most stock markets. Japan’s Nikkei was little changed on balance, however, although it did well late in the year.
Perhaps the most dramatic market move of 2016 was a 41.4% leap in the price of West Texas Intermediate crude oil. This followed a 29% drop in 2015 but still left the price at only around half of its 2014 crest. Gold, which declined 9.8% in 2015, rebounded 7.6% this past year.
Changes in sovereign debt yields were mixed in December as well as for the whole year. Three-month deposit rates also were mixed in the latest month. The dollar and equities advanced in the month, and while oil recorded a large monthly climb, gold slipped 1.9% below its end-November level.
| 10-Yr Yield | 12/30/16 | Chg vs End-Nov | Chg vs End-2015 |
| U.S. | 2.44% | +5 Basis Points | +17 Basis Points |
| Germany | 0.20% | -7 | -42 |
| Japan | 0.04% | +3 | -22 |
| U.K. | 1.23% | -18 | -73 |
| Canada | 1.71% | +13 | +32 |
| Switzerland | -0.26% | -7 | -14 |
| 3-month rates | 12/30/16 | ||
| U.S. | 1.00% | +7 Basis Points | +39 Basis Points |
| Euroland | -0.34% | -3 | -31 |
| Japan | -0.03% | +5 | -11 |
| U.K. | 0.37% | -2 | -22 |
| Swiss | -0.73% | +2 | +3 |
| FX | 12/30/16 | % Chg in USD | Pct Chg in $ |
| EUR/USD | 1.0525 | +0.7% | +3.2% |
| USD/JPY | 116.87 | +2.2% | -2.7% |
| USD/CHF | 1.0183 | +0.1% | +1.9% |
| GBP/USD | 1.2328 | +1.5% | +19.5% |
| AUD/USD | 0.7216 | +2.4% | +1.1% |
| NZD/USD | 0.6947 | +2.0% | -1.6% |
| USD/CAD | 1.3429 | +0.1% | -2.9% |
| USD/CNY | 6.9450 | +0.8% | +7.0% |
| Equities | 12/30/16 | %Chg vs End-Nov | Chg vs End-2015 |
| S&P 500 | 2236 | +1.7% | +9.4% |
| Nasdaq | 5383 | +1.1% | +7.6% |
| Djia | 19764 | +3.3% | +13.4% |
| Dax | 11481 | +7.9% | +6.6% |
| Nikkei | 19114 | +4.4% | +0.4% |
| Ftse | 7143 | +5.3% | +14.4% |
| Canada TSE | 15297 | +1.4% | +17.6% |
| Swiss SMI | 8220 | +4.4% | -6.8% |
| Commodities | 12/30/16 | Chg vs End-Nov | Chg v End-2016 |
| Oil, $ per barrel | 53.72 | +9.3% | +41.4% |
| Gold, $ per ounce | 1150.00 | -1.9% | +7.6% |
Copyright Larry Greenberg 2016. All rights reserved. No secondary distribution without express permission.
Tags: foreign exchange, oil and gold price movements, sovereign debt yields
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