It was a calmer week of the last month in the financial market. Global and national markets generally display flat trends, which means that transaction volumes and price volatilities have declined. Agenda changes and their impact on anticipations are largely ignored, in other words not priced.
Yesterday the US unemployment rate was announced for November. During the month, non-agricultural employment increased by 228 thousand people. The Unemployment rate declined by 4.1 percent. But the increase in wages continued at 0.2 percent per month and 2.5 percent per annum and stayed behind the expectations. These data also did not change expectations about dollar interest rates.
Next week the US Central Bank Open Market Trading Committee will meet and announce its decisions. Markets expect that the dollar interest rate will increase by a quarter point (for the third time this year); we all know that this issue is no longer discussed. However, they will discuss the amount of the increases and how the interest yield curve will take shape in 2018.
The changing global conditions captive the markets for a short-term perspective and cause them to ignore important developments that are against their interests. This behavior aggravating problems. The Monetary authorities which has a medium-term perspective are trying to stop the aggravation of the problems. It seems unlikely that it will be able to compromise permanently with the markets. While wage increases and inflation are limited we have on the other side the ballooning of asset values like real estate and stock market. This continues to be the most fundamental problem which has to be solved.
Right now is a good oppurtunity for the business world to reduce their risks by using the optimistic short term opportunities in the markets. For their health they should also take the negative medium-term into account and not give up on caution.
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