Dashboard update: noisy week

Macro and Markets Dashboard: United States (February 6, 2016 — PDF)

Modest U.S. macroeconomic data continues to pour in, yet equity markets tumbled, possibly pricing in a steeper trajectory for the fed funds rate. JP Morgan Funds’ chief strategist, David Kelly noted in his weekly podcast that the noisy week was “unlikely to resolve issues troubling markets”.

Yesterday’s jobs report showed an increase in non-farm payrolls of 151,000 workers, bringing the unemployment rate down to 4.9%. The number of long-term unemployed was basically unchanged. The civilian labor force participation rate improved by a tenth of a percent to 62.7. Wages also improved slightly; average hourly earnings are 2.5 percent higher than a year ago.

unemp_Jan_2016

A new note from Francisco Blanch of Bank of America Merrill Lynch reminded that the oil price collapse generates an enormous wealth transfer from oil producers to consumers. Over time, this type of transfer may show up in personal savings rate or personal consumption expenditure data, however, the December personal savings rate was unchanged at 5.5 percent.

January manufacturing PMI data was practically unchanged at 48.2, however the index of non-manufacturing business activity fell more than 9 percent to 53.9.

nmi_Jan_2016

Major U.S. equity market indicators were down on the week, and tech stocks were hit particularly hard on Friday. The S&P 500 was down more than three percent during the week, and the Nasdaq composite index dropped more than five percent. Oil, as measured by front month contracts of WTI, closed Friday at $30.89 a barrel.

The dollar depreciated against most major currencies during the week, providing some relief for U.S. exporters (and policymakers). The dollar weakened more than four percent against the Brazilian Real, more than three percent against the New Zealand Dollar, and more than two percent against the Euro, Yen, Canadian Dollar, and Swiss Franc. The dollar was down roughly 1.7 percent against sterling.

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