Although Monday started on a weak note, the markets ended the week substantially higher on the heels of the $908BN in additional stimulus and despite the unprecedented assault on the capital. The Russell 2000 and emerging market indices had the largest gains. On Friday the Labor Department reported December jobs data showing the first decline following seven months of gains. Given the virus surge and weak jobs number, President elect Joe Biden said he would be requesting trillions of dollars in further fiscal support including direct payments to individuals.
Saudi Arabia and OPEC-plus reached an agreement on oil production to maintain their cuts through February at 7.2MM barrels per day below February, 2020. Surprisingly right after the agreement was reached Saudi Arabia unilaterally announced a 1MM barrel per day additional cut. Interestingly, in the prior week the U.S. did not receive a single ship of oil from Saudi Arabia, the first time in 35 years.
Treasury yields rose sharply on anticipated further federal borrowing. The 30-year bond yield closed at 1.876% and the 10-Year note closed at 1.120%. Crude oil rose to $52.63 a barrel while natural gas rose to $2.655 per MMBTUs. The U.S. dollar index rose to 90.1 and gold prices fell to $1846.10 an ounce.
In the economic numbers this week:
- IHS Markit released its purchasing managers indices. Keep in mind that anything above 50 represents expansion and anything below 50 represents contraction.
- U.S. manufacturing PMI rose from 56.7 in November to 57.1 in December, the steepest acceleration in over six years.
- U.S. services PMI fell from 58.4 in November to 54.8 in December.
- Eurozone manufacturing PMI rose from 53.8 in November to 55.2 in December.
- Eurozone composite PMI rose from 45.3 in November to 49.1 in December.
- Japan’s manufacturing PMI rose from 49.0 in November to 50.0 in December.
- Japan’s services PMI fell from 47.8 in November to 47.7 in December.
- China’s manufacturing PMI fell from 54.9 in November to 53.0 in December.
- China’s services PMI fell from 57.8 in November to 56.3 in December.
- The Commerce Department reported that the U.S. trade deficit hit a record $68.14B in November. Imports rose 2.9% and exports rose 1.2%.
- The Labor Department reported:
- A seasonally adjusted 787,000 workers filed initial claims for unemployment in the week ending December 26th. This was down 3,000 from a revised 790,000 the week before.
- The 4-week moving average, designed to smooth out volatility, was 818,750, a decrease of 18,750 from the previous week’s revised average.
- Continuing claims fell from 5.2MM to 5.1MM in the week of December 26th
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 19.6MM to 19.2MM as of December 19th.
- For the full report go here: https://www.dol.gov/ui/data.pdf .
- 140,000 jobs were lost in the month of December and the unemployment rate was unchanged at 6.7%.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the past week:
- Field production of crude oil was unchanged at 11.0MM barrels per day.
- Natural gas storage fell 130BN cubic feet and is above the average level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 8 to 275. The number of active natural gas rigs rose 1 to 84.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
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.