Weekly Macro Matters
Macro Matters – Weekly review, w/c January 8
Stocks and bonds faced a sell-off to start 2024, partially reversing late-2023 gains, as US Fed minutes offered limited clarity on rate cuts. PMI data showed resilience, and the US labor market ended the year strong with jobs data surpassing expectations.
TradeDay Macro Matters
Macroeconomic / Geopolitical Developments
• Stocks and Bonds Sell Off, Partially Correcting November-December Gains:
Wall Street saw a significant downturn to start 2024, with the S&P 500 snapping a 10-week winning streak. Concerns over Federal Reserve policy and a hotter-than-expected jobs report triggered the most substantial sell-off in over two decades, impacting both equities and Treasuries.
• US Fed Minutes Provide Limited Clarity on Rate Cut Timing:
The Federal Reserve’s December minutes revealed uncertainty among policymakers. Divided opinions on rate cuts and the long-term effects of rapid rate increases left analysts speculating on the timing and extent of policy pivots in 2024.
• PMI Data Stays Resilient:
• UK: Services PMI hit a six-month high at 53.4, exceeding expectations.
• US: Services PMI rose to 51.4 in December, marking the 11th month of expansion.
• Eurozone: The Composite PMI stayed in contraction at 47.6 but showed modest improvement in services at a five-month high of 48.8.
• US Employment Report and ADP Data Beat Expectations:
• December jobs added 216,000 positions, surpassing the 170,000 forecast, while the unemployment rate held at 3.7%.
• ADP reported a significant surge of 164,000 private-sector jobs, largely in services, showcasing labor market resilience.
• Despite strong hiring, labor force participation fell to 62.5%, its lowest since February.
What’s Ahead
Central Bank Watch:
• No major central bank activity, but Fed speakers will be closely monitored.
Macro Data Watch:
• Monday, January 8: Eurozone Retail Sales and Consumer Confidence.
• Tuesday, January 9: Tokyo CPI, Australia Retail Sales, EU Unemployment Rate.
• Wednesday, January 10: Australia CPI.
• Thursday, January 11: US CPI (YoY & MoM).
• Friday, January 12: China CPI and PPI, UK GDP, US PPI, Michigan Consumer Sentiment Index.
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