Category: Economic Conditions

Key Global Economic News Help the Dollar and U.S. Equities


As the 24-hour session has progressed, the US dollar and equities have stabilized and turned higher.  Indeed as US traders prepare to return, stocks and the dollars are trading near session highs.  Oil prices are also trading higher.  Core bonds are a bit heavier, and the US 10-year yield has moved back above 2.10%.  News that Libya declared force majeure at two of its oil terminals appeared to have turned the oil market around.  It had continued to fall in the early hours the UAE warned it was prepared for oil prices to slump to $40 a barrel. 

Market Participants Attempt to Smooth Big Moves


The markets have been subject to large moves in recent days.  Some, including the dollar, were counter-trend moves.  Some, like oil, were accelerations of the existing trends.  There have been a number of surprise developments today, including the less dovish Reserve Bank of New Zealand and the 25 bp cut from Norway’s central bank.  The markets are trying to stabilize, and the dollar’s correction appears to have exhausted itself.  

America Leads World in Job Growth


The United States added 321,000 jobs in November as job growth continued to accelerate, marking 2014 as the best year for jobs since 1999.

The United States added over 2.5 million jobs in 2014, while a number of secondary indicators point to improvements in the American labor market. The unemployment rate has fallen steadily in 2014, reaching 5.8% in November, unchanged from the prior month.

Labor force participation, while historically at low rates, has begun to stabilize. It remained at 62.8% in November, the lowest rate since the 1970s.

A Backstory on the U.S. Jobs Report


If there was one report to count on to shake up markets, it was the monthly US jobs report.  Part of the issue was that of all the economic data that the US reports, economists had the greatest difficulty in forecasting the monthly change in non-farm payrolls.  It is simply the residual of a great churn—many job gains and losses–and there are not many reliable inputs.  Another source of volatility was what the labor market news meant for policy.

The Dollar Moves Up on Another Strong U.S. Jobs Report


The strength of the US employment report is seeing the dollar jump across the board.  The divergent theme is out in relief.  The 321k rise in non-farm payrolls is the strongest print of the year and is the second monthly increase above 300k since early 2012 (the other one being this past April).  On top of that, the back months’ figures were revised up by 44k.  

Three Investment Themes Perpetuate and are Strengthening


Throughout the last few months, we have identified three forces that are shaping the investment climate:  the economic and monetary divergence that favors the US, the decline in commodity prices, and a slowing of China. These forces remain intact.  If anything, they have strengthened and reinforced each other.

Personal Incomes, Jobless Claims Disappoint


Personal incomes rose less than expected and jobless claims surprised analysts with a surge on Wednesday, as growing optimism met with sobering data.

Weekly unemployment claims rose to 313,000 on a seasonally adjusted basis, up over 7% from the prior week. The 4-week moving average for claims rose 2% to 294,000. The rise in claims was far above economists’ expectations of a fall in total claims to 286,000.

U.S. Holiday Means Economic News Today, Then Focus Shifts Overseas


The capital markets are mostly quiet, amid a light news stream, and ahead of three key events in the coming days, with U.S. markets closed tomorrow and light participation expected on Friday.  These events are tomorrow’s OPEC meeting, the flash euro area inflation reading on Friday, and month-end portfolio and hedge adjustments.  

Holiday-Shortened Week in U.S. not Short on News


The US dollar has begun the holiday-shortened week on a firm note, but the stronger than expected German IFO report helped steady the euro near $1.2400.  Although the Japanese markets closed earlier today, the dollar rebounded toward JPY118.40, as participants recognize official jawboning was more about the pace of the yen’s decline than the level.  

The German flash PMI was disappointing, but the ZEW survey was considerably better.  The German IFO followed the ZEW lead, not the PMI.  The IFO improved for the first time since April.

The Week in Review: Low U.S. Inflation, Japanese Recession


Low inflation and exposure to weakening global markets is causing concern in the Federal Reserve, while a fall into recession in Japan is causing greater anxiety throughout Asia.