It was another volatile week as mixed tech company earnings and concerns over rising interest rates drove the markets. Despite dire predictions of a slowdown due to Omicron, January posted strong jobs gains.
Central banks met in the U.K. and the E.U. The U.K. raised interest rates for a second time and the ECB, while not acting at this meeting, indicated that it is keeping options open to tapering bond purchases and subsequently raising short term rates that are still negative.
Treasury yields rose with the 30-year bond yield at 2.214% and the 10-Year note at 1.913%. Crude oil rose to $91.93 a barrel and natural gas fell to $4.555 per MMBTUs. The U.S. dollar index fell to 95.48 and gold fell to $1808.80 an ounce.
In the economic numbers:
- IHS Markit reported the following purchasing manager’s Indices for January. Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction:
- U.S. manufacturing PMI fell from 57.7 to 55.5.
- U.S. services PMI fell from 57.6 to 52.1.
- Japan manufacturing PMI rose from 54.3 to 55.4.
- Japan services PMI fell from 52.1 to 47.6.
- Eurozone manufacturing PMI rose from 58.0 to 58.7.
- Eurozone services PMI fell from 53.3 to 52.3.
- Mexico manufacturing PMI fell from 49.4 to 46.1.
- China manufacturing fell from 50.9 to 49.1.
- The Eurozone reported that inflation was at an annual rate of 5.1% in January. For calendar year 2021, inflation was 5.0%.
- The Treasury Department reported that the U.S. national debt is now over $30TN.
- The Labor Department reported :
- Job openings rose from a revised 10.8MM in November to 10.9MM in December.
- The resignation rate fell from 3.0% to 2.9%.
- There were 1.7 jobs for each unemployed worker.
- The U.S. added 467,000 jobs in January, far exceeding expectations and despite the Omicron surge.
- The unemployment rate rose to 4.0% as more people entered the workforce.
- Absences rose to the highest level since January 2021, largely due to Omicron.
- November and December jobs numbers were revised upwards by a total of 700,000.
- First time claims for unemployment were 238,000, down from the prior weeks revised 261,000.
- The 4-week moving average of claims, designed to smooth out volatility, rose to 255,000 up from the revised 247,250 in the prior week.
- Continuing claims rose from 1.63MM to 1.68MM in the week ending January 22nd.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Job openings rose from a revised 10.8MM in November to 10.9MM in December.
- 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 fell from 11.6MM BPD to 11.5MM BPD.
- Natural gas storage fell 268BN cubic feet and is slightly below the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 2 to 497. The number of active natural gas rigs was rose 1 to 116.
- Factset reported with 56% of S&P 500 companies reporting earnings, the blended earnings increase is 29.2% from a year ago.
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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.
