RJ Hamster
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In this week’s Steady Investor, we examine how today’s market environment is affecting financial planning, including factors such as:Inflation cools, but unevenlyChina’s growth model shiftingAI productivity gains lag expectationsThe “Last Mile” of Inflation is Getting Harder, and It Could Complicate Rates – Inflation moved slightly further from the Federal Reserve’s 2% target in November, though the data came in broadly as expected. The personal consumption expenditures (PCE) price index, which is the inflation measure most closely watched by the Federal Reserve, showed both headline and core inflation running at 2.8% in November. That marked a modest uptick from October’s 2.7% reading, according to data released by the Bureau of Economic Analysis. Monthly inflation increased 0.2% in both October and November, which was consistent with expectations. Looking beneath the surface, price pressures remained relatively contained. Goods and services prices both rose 0.2% in November, food prices were flat, and energy costs increased after declining in October. While inflation remains above the Fed’s target, there was little in the report to suggest a renewed acceleration, which we think keeps the door open for one or two more rate cuts in 2026. At present, markets expect the Fed to hold interest rates steady at its upcoming policy meeting, but inflation that is not getting worse—while the jobs market shows signs of softening—could bring the fed funds rate down over the course of the year. And that should serve as a tailwind for equity markets, in our view.1
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