Money Market Recap and Forecast
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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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Monday, January 5, 2015
Money Market Recap & Forecast
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