Weekly Market Commentary As of January 2nd 2015 The Economy Positive U.S. consumer sentiment continued to offset a mixed housing market amid a weak year-end environment for manufacturing and construction. Overseas, the picture appeared sluggish for U.K. housing and manufacturing, while eurozone manufacturing growth warmed slightly. SEI expects continued gradual growth in the North American and U.K. economies, while the eurozone and emerging markets are expected to continue to show measured improvement. Third-quarter economic growth was revised upward to an annualized 5% from initial estimates. The fastest pace of expansion since 2003 points to economic momentum for the fourth quarter. Initial jobless claims rose to 298,000 for the week of December 27, while the four-week average remained about 10,000 below a month earlier. Ongoing claims, reflecting delayed data, declined during the week of December 20. U.S. manufacturing growth decelerated more than expected in December, according to the Institute of Supply Management’s survey of purchasing managers. A report from Markit showed similar findings, marking the lowest gains since January 2014. Construction spending declined 0.3% in November despite expectations for an increase. Contracting outlays on public projects claimed primary responsibility for the drop, while private residential spending continued to rise. The University of Michigan reported a surge in consumer confidence during December, building on November’s gain and reaching its highest reading since January 2007. Pending home sales unexpectedly rose 0.8% in November and a seasonally-adjusted 4.1% from a year earlier, for the largest year-over-year gain since August 2013. U.S. home prices remained soft in October, according to the Case-Shiller home price index. The year-over-year reading reflected a 4.5% increase—a slight decline from the prior month—and the lowest rate since October 2012. U.K. economic growth increased 0.7% during the third-quarter, and 2.6% over the prior year, in line with initial estimates. The third quarter growth rate represents a decline from the previous quarter. Eurozone manufacturing activity rose slightly in December, just below estimates. The survey offset November’s decline, moving further into growth territory as new orders increased for the first time in four months. Chinese manufacturing deteriorated slightly in December, effectively registering flat month-over-month output. Production and total new orders decelerated even as export orders improved. Economic Calendar January 5: Motor Vehicle Sales January 6: Factory Orders, ISM Non-Manufacturing Index January 7: International Trade, FOMC Minutes January 8: Jobless Claims January 9: Employment Situation Stocks Global equity markets fell for the week. In the U.S., all sectors were negative. Materials and energy led; information technology and consumer staples lagged. Value stocks beat growth stocks and small-company stocks led large- company stocks. Bonds Global bond markets rose for the week. Government bonds outperformed, followed by corporate bonds. High-yield bonds lagged. U.S. Treasury yields, with the exception of short duration, fell this week, prior to the release of the Federal Open Market Committee’s (FOMC) latest meeting minutes.
Posted on: Tue, 06 Jan 2015 17:21:59 +0000
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