As the winter passes, steadily cooling inflation will likely be the gift that keeps on giving in 2024.

The Holidays appears to have come early this year as investors were given much to celebrate this season. At the recent Federal Open Market Committee meeting, Fed Chairman Jerome Powell and his fellow Federal Reserve colleagues “gifted” investors with a “turtle” dovish pivot, sparking a rally in both stocks and bonds. Additionally, with inflation steadily trending back to target, Holiday shoppers should be pleased that the cost of spreading holiday cheer rose at a slower pace this year. In fact, PNC’s Christmas Price Index, which measures the cost of each gift in the song “The Twelve Days of Christmas,” rose by 2.7% from 2022.

Reflective of broader inflation dynamics, service-related gifts were the key drivers of price increases, rising 3.3% year-over-year (y/y). The eleven pipers piping and twelve drummers drumming were not exempt from tight labor markets, and the cost of hiring these groups for your true love rose 6.2% y/y. However, the market for nine ladies dancing eased, with prices remaining flat this year after a 10% increase last year. Elsewhere, goods-related gifts rose by a more tempered 1.5% y/y, weighed down by stagnant prices for four calling birds, five gold rings and seven swans-a-swimming. While partridge prices held steady at 2022 levels, the cost of a partridge in a pear tree rose 13.9% y/y as higher housing costs supported pear tree prices. Finally, prices for two turtle doves rose by a whopping 25%,

making it the most volatile gift this year.

I enjoyed reading “The Twelve Days of Christmas” tidbit on inflation from JP Morgan Asset Management. On a closing note, most US corporations (and the economy as a whole) are performing very well. This has fueled very nice 4th quarter portfolio gains and the Dow Jones Industrial Average has set a record high. The great news for investors is that both the stock and bond markets continue to rebound from 2022 lows. I see this momentum continuing to build in 2024 and look for solid investment results this year.

Thank you for your business and continued trust.