The Big Number
The month-to-date return for the S&P 500 (through December 27), also known as the “Santa Claus rally.”

What this means
Last year the Santa Claus “rally” delivered coal, as the return for December 2018 was the worst in 85 years. This year’s December return is right about average for the past 85 years, and comes with lower volatility and declining market risks.

Market Notes
It was mostly quiet, with little news on the policy front.  Many of the issues that dominated the year’s news – trade, in particular – appear to be resolving positively. Even impeachment news took something of a breather during the short holiday week.

The Markets’ Reaction
Markets were up on slow trading.  The S&P 500 returned 0.6% (SPX), and is on track for its best year since 2013. Emerging Markets returned 1.0% (MXEF) and international developed markets climbed 0.8% (MXEA).  Bonds yields fell across the curve and credit spreads continued to decline.

What to Watch
The calendar rolls over to a new decade, and we expect to see more than one comment about 20/20 hindsight (or foresight) as the year moves along.  In the U.S., the Market Purchasing Manager Index (PMI) number is out on Thursday and the Institute of Supply Management (ISM) survey on Friday, providing a look at manufacturing activity.

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