January 8, 2020
Chief Economist Scott Brown discusses the latest market data.
Democrats won the two runoff elections in Georgia, gaining control of the Senate (Vice President-elect Harris will have the tie-breaking vote). There was an insurrection on Capitol Hill as lawmakers were in the process of ratifying the November election results. The stock market seemed to take it all in stride.
The December Employment Report was mixed, reflecting an impact from the pandemic surge. Nonfarm payrolls fell by 140,000, but with an upward revision of 135,000 to the two previous months. December weakness was concentrated in restaurants and bars (-372,000) and state and local government (-51,000). Otherwise, nonfarm payrolls rose by 232,000 and private-sector payrolls rose 277,000. The unemployment rate held steady at 6.7%, but with the rate for prime-age workers (age 25-54) falling from 6.1% to 5.8% and rates for teenagers and young adults, who typically get temporary seasonal jobs in December, rising.
Headline figures from the December ISM surveys were stronger than anticipated, but were boosted partly by a pandemic-related increase in supplier delivery times. Weekly jobless claims remained elevated. The monthly trade deficit hit a record high in November, as imports continued to recover faster than exports.
Next week, the Consumer Price Index is expected to reflect higher gasoline prices in December, but core inflation should remain relatively low (with limited pressure in rents). Unit motor vehicle sales improved in December, but retail sales are expected to reflect weakness in holiday sales (although November may have been more out of line with the usual seasonal pattern). Industrial production should reflect a relatively strong gain in factory output.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.3568||1.310|
|Dollars per Euro||1.2272||1.111|
|Japanese Yen per Dollar||103.81||109.12|
|Canadian Dollars per Dollar||1.269||1.304|
|Mexican Peso per Dollar||20.013||18.815|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.11||1.09|
Treasury Yield Curve – 01/08/2021
As of close of business 01/07/2021
S&P Sector Performance (YTD) – 01/08/2021
|January 13||—||Consumer Price Index (December)|
|—||Fed Beige Book|
|January 15||—||Producer Price Index (December)|
|—||Retail Sales (December)|
|—||Industrial Production (December)|
|—||UM Consumer Sentiment (mid-January)|
|January 18||—||MLK Holiday (markets closed)|
|January 20||—||Inauguration Day|
|January 21||—||Building Permits, Housing Starts (December)|
|January 27||—||FOMC Policy Decision|
|January 28||—||Real GDP (4Q20, advance estimate)|
|February 5||—||Employment Report (January)|
All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business January 7, 2021.