Monday, January 5, 2015

Money Market Recap & Forecast

Money Market Recap and Forecast
MMRecap for January 5th
Last week was a bad one for stocks. Fortunately, there were only three days featuring economic reports due to schedule changes brought about by the holidays.
Monday there were no economic reports, but MarketWatch, an economic news site, reported that employers are unlikely to release current employees. This, in turn, should lead to a stronger labor market and increased economic growth, but the markets remained oblivious.
Tuesday was a little livelier, but the results were disappointing. The Case-Shiller report on home prices in the nation’s 20 largest cities showed October prices dipped to 4.5% from 4.8% the previous month. However, consumer confidence rose to 92.6 -- from its 88.7 in December. The 10-year Treasury went down a couple of basis points, closing at 2.20%.
There were a few reports on Wednesday starting with the weekly jobless claims. For the week ended on December 27, the initial jobless claims went up to 298K, a sharp rise from the 281K claims from the week before. The Chicago PMI decreased a bit in December, registering a 58.3. This was down from 60.8 in November. Pending home sales seemed to do well in November showing a 0.8% rise, compared to a 1.1% decline from the month before. On Wednesday the traders at all of the indices decided to take their year-end profits and sell. The 10-year Treasury note dropped three more points to end the day at 2.17%.
Markets were, of course, closed New Year’s Day, and to no one’s surprise, nothing much happened on Friday. The 10-Treasury note waved goodbye to 2014 with a smile. It closed at 2.12%!
There was no report from the MBA last week, but they’ll be back on the job this Wednesday.
After a light week last week, this week has many reports, but none to speak of for today.
Tomorrow, however, we get factory orders for November, which are expected to come in at -0.3% -- better than the previous -0.7%. It will be followed by the ISM index on the service sector for December, which should come in a tad above 58.5. We will also get the employment change report from ADP, the payroll processing giant. They expect 245K to be added to the work force versus 208K in December.
Wednesday is a relatively light day; the only report that might move the markets will be the FOMC minutes for the week ended December 17th.
We’re back to a normal schedule with the initial and continuing jobless claims reports coming out on Thursday. The forecasters are expecting continuing claims to go up a bit for the week ended December 27, with a prediction of 2375K. This compares to 2353K from the week before. This might be due to the end of seasonal work for 2014. Initial claims for the week ended on January 3 might go down to 290K, which would be an improvement from the 298K reported the previous week. On Thursday we also get the consumer credit report for November. Not surprisingly, consumer credit is expected to hit $16.0B, up from $13.2B in October. In a sense, this is a good sign that people were a little more confident as we went into the holiday season.
On Friday the nonfarm payrolls report for December will be released. Analysts are looking for 240K workers to have been added. This compares with 321K jobs added in November. The unemployment rate report follows and is expected to hold at 5.8%.
A Happy and Prosperous New Year to all!
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