January 9th – Weekly Update

  • U.S. equity indexes ticked up during the period with the Dow Jones, Nasdaq and S&P 500 all posting gains. Gold advanced and oil was slightly down. The 10-year U.S. Treasury note yield ended the week at approximately 2.41%.
  • The release of the latest Federal Open Market Committee (FOMC) minutes revealed that participants emphasized considerable uncertainty surrounding the timing, size and composition of any future fiscal policy initiative.
  • Meeting participants indicated that upside risks to their forecasts for economic growth had increased as a result of prospects for more expansionary fiscal policies in coming years. Several members noted that if the labor market appeared to be tightening significantly more than expected, it might become necessary to adjust the FOMC’s communication consistent with the possibility that a less gradual pace of rate hikes could become appropriate.
  • According to the December nonfarm payroll report, the U.S. added 156K jobs, below the 175K consensus estimate. However, November’s level was revised higher to 204K from 178K, while October was revised lower by 7K. The three-month average monthly gain now stands at 165K.
  • The unemployment rate rose to 4.7% from 4.6%, in line with consensus. Average hourly earnings rose 0.4% month-to-month after a slight decline in the prior month. The year-to-year rate rose to 2.9%, the highest since June 2009. However, average weekly hours were unchanged at 34.3, below the 34.4 expected.
  • The Institute for Supply Management’s ISM manufacturing index increased to 54.7 in December from 53.2 in November. This was ahead of the 53.7 consensus.
  • The ISM non-manufacturing index also beat expectations for December, coming in at 57.2. That beat the 56.8 consensus estimate and was unchanged from the prior month. New orders rose to 61.6 from 57.0 in November. However, the employment component fell to 53.8 from 58.2.
  • December auto sales are on pace for a new trend high with the majority of automakers having reported results. Auto data pegged the final tally at a SAAR of 18.4M. That is above the November 2015 peak rate of 18.1M, while beating the 17.5M-17.7M consensus estimate, and up from a 17.5M in the previous month.

CPWM Weekly Market Monitor (2017.01.09)