Weekly Update – January 10, 2020
- U.S stocks closed an otherwise solid week slightly lower on Friday following a softer-than-expected December non-farm payrolls reading. All three major averages shrugged off geopolitical tensions and gained as the week progressed, with the Dow Jones, S&P 500 and NASDAQ gaining approximately 0.7%, 1.0% and 1.8%, respectively. The Dow Jones average crossed the 29,000 threshold for the first time ever on Friday, only to be pulled slightly off those highs by Boeing Co., which fell nearly 2% on headlines. Elsewhere, U.S. Treasury yields edged lower, with the two-year and 10-year yields easing 1 bp to 1.56% and 3 bps to 1.83%, respectively.
- U.S. WTI crude oil slid 6.4% for the week to $59.04 a barrel, its largest such decline since July. U.S. crude rose to its highest level since May last Monday as geopolitical tension between the U.S and Iran flared, only to move sharply lower on Wednesday when tensions eased.
- December’s nonfarm payrolls read of 145,000 was below consensus estimates of 160,000. The unemployment rate remained at 3.5% from the previous month and was in line with consensus. Furthermore, the labor force participation rate of 63.2% and employment to population ratio of 61% were both unchanged.
- Earlier in the week, the December ADP employment report showed 202,000 gain, well above consensus 165,000 and November’s 124,000. The December report was strongest since April and cited broad gains across industry size.
- Weekly initial jobless claims of 214,000 for the week ending January 4 were better than consensus estimates of 225,000 and down 9,000 from the prior week. This level is below the 2019 average of 218,000, and brought the four-week average down to 224,000 after being elevated in December.
- ISM Non-Manufacturing Index for December was 55, beating the 54.4 estimate and was up from November’s 53.9.
- Final December IHS Markit Services PMI of 52.8 beat consensus estimates of 52.2 and gained from November’s 51.6, marking the fastest pace since July.
- Chinese media reported that China’s trade delegation led by Vice Premier Liu He plans to be in Washington next week to sign the “phase one” US-China trade deal.