The Santa Clause rally delivered this year.
Happy New Year to everyone reading this – 2020 is over, let’s see what 2021 has in store for us. The clear winners of the last three months are small caps – they added another 6% this week too.
Energy and financials won the year-end sector race – Energy tacked on another 9.25% this week while Materials added over 5%.
Notable firsts on this first week of 2021 – The first time the 10 year treasury yield was above 1% since March -its now 1.13% – First time we had a negative jobs report since April Minus 140k jobs in December.
The 10 year yields jumped 20bps this week sending the yield over 1% for the 1st time since March.
11/5/20 FOMC Statement FOMC Minutes Credit, Liquidity and Balance Sheet Federal Reserve Dot Plots US Debt Measurement US Corporate Debt Tops 7 Trillion Treasury.gov yields FOMC Policy Normalization Statement Longer Run Goals August 2020
Global Bond Yields
Foreign Exchange Market
The Baker Hughes rig count gained 9 this week. There are 360 oil and gas rigs operating in the US – down 421 over last year.
- Brent Crude Oil gained 8.80% this week closing at $56.36/bbl
- WTI Crude Oil gained 7.67% this week to close at $52.24/bbl
- Heating Oil gained 6.44% this week closing at $1.58/gallon
- Natural Gas gained 6.34% this week closing at $2.70 per million BTUs
- Unleaded Gas gained 9.25% this week closing at $1.54/gallon
- Gold lost 3.15% this week closing at $1835.40/oz
- Silver lost 6.72% on the week closing at $24.64/oz
- Palladium lost 3.62% this week closing at $2365.00/oz
- Platinum lost 0.73% this week closing at $1071.30/oz
- Copper gained 4.39% this week closing at $3.67/lb
November Jobs Report – BLS Summary – Released 1/8/2021 – The US Economy lost 140k nonfarm jobs in December and the Unemployment rate was unchanged at 6.7%. Average hourly earnings increased 23 cents to $29.81. Hiring highlights include +161k Professional and Business Services, +121k Retail Trade, and -498k Leisure and Hospitality.
- Average hourly earnings increased 23 cents to $29.81.
- U3 unemployment rate was unchanged at 6.7%. U6 unemployment rate declined to 11.7%.
- The labor force participation rate was unchanged 61.5%.
- Average work week declined 0.1 hour to 34.7 hours.
Weekly Unemployment Claims – Released Thursday 1/7/2021 – Initial jobless claims for the week ending January 2nd decreased 3k to 787k. The 4-week moving average was 819k, an decrease of 19k.
Job Openings & Labor Turnover Survey JOLTS – Released 12/9/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings was little changed at 6.7 million on the last business day of October. Over the month, hires were little changed at 5.8 million and separations increased to 5.1 million. Within separations, the quits rate was unchanged at 2.2%. The layoffs and discharges rates increased to 1.2%.
Employment Cost Index – Released 10/30/2020 – Compensation costs for civilian workers increased 0.5% for the 3-month period ending in June 2020. The 12 month period ending on September 2020 saw compensation costs increase by 2.4%. The 12 month period ending September 2019 increased 2.8%. Wages and salaries increased 2.5 percent over the year and increased 2.9 percent for the 12-month period ending in September 2019. Benefit costs increased 2.3 percent for the 12-month period ending in September 2020. In September 2019, the increase was also 2.3 percent. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Consumer Credit – Released 1/8/2021 – In November, consumer credit increased at a seasonally adjusted rate of 4.4%. Revolving credit decreased at an annual rate of 1.0%, while nonrevolving credit increased at an annual rate of 6.1%. Total Outstanding consumer credit is currently at $4.179 trillion.
U.S. Trade Balance – Released 1/7/2021 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in November by $5.0 billion to $68.1 billion. November exports were $184.2.0 billion, $2.2 billion more than October exports. November imports were $252.3 billion, $7.2 billion more than October imports. The goods and services deficit increased $73.6 billion or 13.9% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $372.3 billion or 16.1% and decreased $298.7 billion or 10.5% respectively.
PMI Non-Manufacturing Index (ISM Services) – Released 1/6/2021 – Economic activity in the non-manufacturing sector grew in December for the seventh consecutive month. ISM Non-Manufacturing registered 57.2 percent, which is 1.3 percentage points above the adjusted November reading of 55.9 percent.
PMI Manufacturing ISM Index – Released 1/4/2021 – December PMI increased 3.2% to 60.7% from November’s reading of 57.5%. The New Orders Index was up 2.8% from November’s reading of 65.1% to 67.9%. The Production Index registered 64.8%, up 4.0%.
U.S. Construction Spending – Released 1/4/2021 – Construction spending increased 0.9% in November measuring at a seasonally adjusted annual rate of $1,459.4 billion. The November figure is 3.8% above the November 2019 estimate. Private construction spending was 1.2% above the revised October estimate at $1,098.6 billion. Public construction spending was 0.2% below the revised October estimate at $347.6 billion.
Recent Economic Data
Links take you to the data source
Chicago PMI – Released 12/30/2020 – Chicago PMI increased to 59.5 points in December following a decline in November. This marks six consecutive months above the 50-mark following a full year under it. Employment saw the largest monthly gain, followed by Order Backlogs. New Orders recorded the biggest decline.
Durable Goods – Released 12/23/2020 – New orders for manufactured durable goods in November increased for the seventh consecutive month up $2.2 billion or 0.9% to $244.2 billion. Transportation equipment led the increase rising $1.5 billion or 1.9% to $78.8 billion.
Personal Income – Released 12/23/2020 – Personal income decreased $221.8 billion or 1.1 percent in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $218 billion or 1.2 percent and personal consumption expenditures (PCE) decreased $63.3 billion or 0.4 percent.
New Residential Sales – Released 12/23/2020 – Sales of new single-family homes declined 11% to 841k, seasonally adjusted, in November. The median sales price of new homes sold in November was $335,300 with an average sales price of $390,100. At the end of November the seasonally adjusted estimate of new homes for sale was 286k. This represents a supply of 4.1 months at the current sales rate.
Third Estimate of 3rd Quarter 2020 GDP – Released 12/22/2020 – Real gross domestic product (GDP) increased at an annual rate of 33.4 percent in the third quarter of 2020, according to the third estimate released by the Bureau of Economic Analysis. This increase follows a 31.4% decline in GDP in the second quarter of 2020. The GDP third estimate is based on source data that are more complete than that of the advance estimate and second estimate. The increase in real GDP reflected increases in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans), state and local government spending, and imports. With the second estimate, upward revisions to nonresidential fixed investment, residential investment, and exports were offset by downward revisions to state and local government spending, private inventory investment, imports, and personal consumption expenditures (PCE). In the third estimate GDP was increased 33.4% vs. 33.1% in the second estimate. The upward revision primarily reflected larger increases in personal consumption expenditures (PCE) and nonresidential fixed investment.
Consumer Confidence – Released 12/22/2020 – The Consumer confidence index declined 4.6% in December following a decline in November. The Index now shows a reading of 88.6, down from 92.9 in November.
Existing Home Sales – Released 12/22/2020 – Existing home sales declined in November ending five consecutive months of sales gains. Sales declined 2.5% to a seasonally adjusted rate of 6.69 million in November. Sales are currently up 25.8% from one year ago. Housing inventory sits at 1.28 million units. Down 9.9% over last month. Down 22% over last year. Unsold inventory sits at an all-time low 2.3 month supply. The median existing home price for all housing types was $310,800.
US Light Vehicle Sales – Released 12/17/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.552 million units in November.
Housing Starts – Released 12/17/2020 – New home starts in November were at a seasonally adjusted annual rate of 1.547 million; up 1.2% above October and 12.8% above last November’s rate. Building Permits were at a seasonally adjusted annual rate of 1.639 million, up 6.2% compared to October and up 8.5% over last year.
Retail Sales – Released 12/16/2020 – U.S. retail sales for November decreased 1.1% to $546.5 billion. U.S. retail sales are up 4.1% year/y.
Industrial Production and Capacity Utilization – Released 12/15/2020 – In November Industrial production increased 0.4%. Total Industrial production is still 5.0% below its pre-pandemic February level. Manufacturing increased 0.8%. Motor vehicles increased 5.3%. Utilities declined 4.3%. Total industrial production was 104.0% of its 2012 average which is 5.5% lower in November than a year ago. Total capacity utilization increased 0.3% to 73.3% in November which is 6.5% below its long run average.
Producer Price Index – Released 12/11/2020 – The Producer Price Index for final demand increased 0.1% in November. PPI less food and energy increased 0.2% in November.
Consumer Price Index – Released 12/10/2020 – The Consumer Price Index increased 0.2% in November. Core CPI, which excludes food and energy was also up 0.2%. The monthly changes left total CPI up 1.2% year-over-year and core CPI up 1.6%.
Next week we get data on CPI, PPI, Industrial Production and Capacity Utilization, and Retail Sales.