Weekly Market Summary

Extra Credit^*

• The Conference Board's Consumer Confidence Index increased to 114.8 in January, up from 108.0 the prior month. It’s the highest level of consumer confidence since December 2021 and the third consecutive monthly increase. With January’s print, the index moved significantly above the 103-106 range, at which it had been hovering near since the end of 2022. The index rose in January due to more positive views on income prospects along with business and employment conditions.
• The boost in consumer confidence can be partly attributed to consumers reacting positively to declining inflation, specifically in core PCE inflation that is a key indicator for the Federal Reserve in deciding whether to cut interest rates. 
• In January, a larger share of respondents viewed business conditions as “good” (22.5%, up from 21.1% in December), and the percentage viewing them as “bad” declined (from 17.2% in December to 14.2%).This was alongside an increase of consumers viewing business conditions as “normal” (from 61.7% to 63.3%).
• Labor-market views showed improved optimism. Respondents who viewed jobs as “plentiful” increased month-over-month (45.5%vs. 40.4%), while those who considered them “not so plentiful” declined (from46.5% down to 44.7%). Those who considered them “hard to get” declined (13.1%in December to 9.8% in January).
• Predictions for this week’s Federal Reserve meeting showed a 97.9% probability for a continued pause in the rate-hiking cycle. Expectations for a first rate cut of25 basis points still point to May.
• Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished the month at 2.10% and 2.08%, respectively, up and unchanged from 2.01% and 2.08%in November. The 25-year historical default rate for loans and high-yield bonds is 3% and 3.4%, respectively.

Sources: Bloomberg and JP Morgan as of 1/30/24.

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