The markets ended the first week of the new year with a strong rally on Friday. This followed the release of the December jobs report showing stronger than expected job gains with a smaller year over year gain in hourly wages. All major indices ended the week higher with the largest gains in the international developed and emerging markets indices.
The FED released minutes from last month’s meeting which reaffirmed its concerns about lingering inflation and warned against pausing too soon. While hiring remains strong, there are other signs of weakness in things like purchasing manager’s indices and imports.
Treasury bond yields fell with the 30-year bond at 3.687% and the 10-Year note at 3.563%. 30-year mortgage rates rose to 6.48%. Crude oil fell to $73.72 a barrel and natural gas fell to $3.446 per MMBTUs. The U.S. dollar index rose to 103.91 and gold rose to $1870.50 an ounce.
- S&P Global released its purchasing managers indices for December. Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
- US manufacturing PMI fell from 47.7 to 46.2.
- US Services PMI fell from 46.2 to 44.7.
- Canada manufacturing PMI fell from 49.6 to 49.2.
- Mexico manufacturing PMI rose from 50.6 to 51.3.
- China manufacturing PMI fell from 49.4 to 49.0.
- China services PMI rose from 46.7 to 48.0.
- Japan manufacturing PMI fell from 49.0 to 48.9.
- Japan services PMI rose from 50.3 to 51.1.
- Eurozone manufacturing PMI rose from 47.1 to 47.8.
- Eurozone composite rose from 47.8 to 49.3.
- The Commerce Department reported that the U.S. trade deficit fell at the most rapid pace in November since February 2009.
- Imports fell 6.4% on weaker consumer spending.
- Exports fell 2.0% weaker demand including oil and gas.
- The Labor Department reported:
- Job openings were nearly unchanged in November at 10.5MM.
- There are about 1.74 jobs openings per unemployed worker.
- Job quits remain near 4MM.
- The U.S. added 223,000 jobs in December.
- 8,000 jobs were added to manufacturing.
- The unemployment rate fell from a downwardly revised 3.6% in November to 3.5% in December.
- The prior two months of job gains were revised lower by a total of 28,000.
- Average hourly earnings were up 4.6% from a year ago, down from 5.0% year over year in November.
- Seasonally adjusted first-time claims for unemployment were 204,000, down from a revised 225,000 in the prior week.
- Job openings were nearly unchanged in November at 10.5MM.
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- The 4-week moving average of claims, designed to smooth out volatility, was 213,750 down from a revised 220,500 in the prior week.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
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- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil rose from 12.0MM to 12.1MM BPD.
- Natural gas storage fell 221BN cubic feet and is below the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 3 to 618. The number of active natural gas rigs fell 4 to 152.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O. 269-441-4143 517-795-2025
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.
