Today’s session has been quite the wild ride as the major US equity indices opened well in the red, only to have made a huge swing of over 1.0% to the upside. The culprit this time wasn’t oil, but rather Russia as the country’s central bank decided to hike interest rates overnight to 17.0% from 10.5% driven by the need to limit devaluation in the ruble and hedge inflation risks. The result was a massive decline in the value of the ruble, which lost about 10% of its value against the US dollar in less than a day. At its worst, one US dollar bought 73 rubles, when earlier this year, one dollar bought 35 rubles. After FX volumes tapered off by mid-morning due to ruble trading being halted, the markets did a 180-degree turn to the upside, and completely made up for the earlier losses. It’s not positive, fundamental news driving the markets higher at the moment, although economic data was rather mixed in the US.

Housing starts remain flat, and will close out 2014 not much better than they ended last year. In November, single-family and multifamily housing starts actually moved in completely opposite directions. During the month, housing starts declined by 1.6% after rebounding by 1.7% in October. Analysts had projected a 1.038-million pace for November, however the officially reported 1.028-million unit pace was down 7.0% over last year. November strength was in the volatile multifamily component, which rebounded by 6.7% after declining by 9.9% in October. By contrast, single-family starts fell 5.4% in November after gaining 8.0% in October. On the permits side, housing permits declined by 5.2% month over month, after a 5.9% increase in October. The 1.035-million unit pace was down 0.2% over last year, and market expectations were for 1.060 million units annualized. We note that housing data is continuing to oscillate with no real evident trends. October was a positive month, but was ultimately cancelled out by November. For 2014, it looks like housing growth will be flat-to-slightly-positive over last year.

While not a major market mover, Markit’s reading of the US manufacturing purchasing managers index (PMI) confirmed the weak December data expressed in the Empire State Survey yesterday morning. The flash reading for December fell to 53.7, which is still above the 50-breakeven level, but indicative of the slowest growth in the last eleven months (see chart below). The final reading for November came in at 54.8, which was just above the 54.7 flash reading from the middle of the month. The index also noted new 11-month lows for growth in new orders and output, and employment growth in also decelerating. Cost inflation, which is a reflection of falling oil prices, is now at a 19-month low. November was a very good month for the manufacturing sector, based not only on yesterday's industrial production and Empire State Survey, but December may be another story.