Week in Review (Dec 8-12)Last week ended on a very high note. The big news was November payroll report on Friday, which showed a whopping 321K increase plus 44K upward revisions for September and October. While the unemployment rate did not budge and stayed at 5.8%, hourly earnings surged 0.4%. The S&P500 closed at an all-time high (2,075.37), so did the DJIA (17,958.79). On intra-day basis, the DJIA came within 10 points of psychologically important 18,000 level.
Monday started with a thud as data from Japan (Q3 GDP revised down to -1.9% from -1.6%), Germany (October IP was 0.2% vs. 0.4% expectation) and China (November imports and exports missed consensus) disappointed investors.
On Tuesday, European markets
plunged following a surprise announcement of Greek Presidential election while
Chinese markets plummeted after the news that bonds rated below AAA or sold byissuers graded lower than AA can no longer be used as collateral for short-termloans obtained through repurchase agreements. US markets did fall sharply at
the opened but recouped most of the gains by the end of the session, but yield
on 10-year fell and closed at the lows of the session. The Fed releasedCapital Surcharges for SIFIs for comments, which closes at the end of February,
which was considered much stringent than expected, and that pressure JPMthe following day.
On Wednesday, the OPEC cuts its forecast for 2015demand by 70K b/d that put additional pressure on oil, which approached $60
level.
On Thursday, the ECB’s second allotment of targeted longer-termrefinancing operations took place today and delivered a disappointing result.
The ECB allotted EUR 130 bn, somewhat short of the consensus forecast of EUR
148 bn. The Russian central bank raised its “key rate” by 100 bps to anew level of 10.5%. In the US November Retail sales was up 0.7% vs. 0.4%consensus and the gains were broad-based. The yield on 10 year rose but the
increase was capped after a very strong auction for 30-year treasury.
S&P500 also rolled over with the decline in treasury yield as well as more
weakness in crude oil.
On Friday US markets fell as oil could not hold the
critical $60 level and fell sharply. Again the Energy sector was the culprit as the IEA cut its forecast for global oil demand growth next year by 230,000 barrels per day to 900,000 barrels per day on the expectation of lower fuel consumption in
Russia and other oil-exporting countries. The risk-off environment lifted
treasuries; yield on 10-year fell 8bp to 2.09%.
Best & Worst Performers in the S&P500 During the Week
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