Hey everyone, as we get into the first full week of trading in 2021 the markets are continuing their bullish assault making new all time highs on an almost daily basis. Get my take in this week’s Round-Up;
WEEKLY SOUND BITES:
• Major indexes continued to march to record highs as small-caps outperformed large-caps by a wide margin, and value stocks outpaced growth shares…A surge in longer-term Treasury bond yields boosted financials shares by holding out the promise of improved lending margins, but rising rates weighed on the small real estate sector…Heightened prospects for significant fiscal stimulus under the incoming Biden administration appeared to be the major factor driving the week’s gains…Some observers warned of the inflationary dangers of USD $2,000 stimulus payments and other proposed measures, while others discounted the risk given the current economic strains…
• The week’s economic data arguably provided ammunition to both sides of the debate. On Tuesday, the Institute for Supply Management (ISM) revealed that its gauge of U.S. manufacturing activity in December rose to its highest level (60.7, with levels above 50 indicating expansion) since August 2018. The ISM’s services sector gauge also surprised on the upside, hitting 57.2, its highest level in three months. Conversely, the labor market showed signs of a sharp slowdown, due mostly to job losses at bars and restaurants shuttered by coronavirus containment measures. Nonfarm payrolls, reported Friday, fell by 140,000 in December, marking the first monthly decline since April. October and November gains were revised significantly higher, however.
• The bond market appeared unmoved by the poor jobs report, with the yield on the benchmark 10-year Treasury note continuing to move higher in its wake. For the week, the yield jumped roughly 20 basis points and hit its highest level (around 1.12%) since March…The broad municipal bond market proved resilient despite the sell-off in U.S. government bonds…Many observers believe that Democratic control of both houses of Congress is likely to lead to greater federal support for financially stressed states and municipalities…
• Shares in Europe shrugged off the imposition of stricter lockdowns and rose on hopes that coronavirus vaccines and a potentially massive U.S. stimulus package would spur an economic recovery…These same factors helped to drive core eurozone government bond yields higher. Weaker-than-expected eurozone inflation data and persistent concerns about the coronavirus’ resurgence curbed the rise in yields, however. Peripheral eurozone bond yields largely fell during the week, moving inversely to core markets… Better-than-expected German industrial production and trade figures for November, together with stronger factory orders data, signaled that the economy may have expanded in the fourth quarter.
• The World Bank’s January 2021 Global Economic Prospects report forecasts global economic growth of 4.0% in 2021, following the 4.3% contraction in 2020. The World Bank lowered the gross domestic product (GDP) growth targets for about half of the countries worldwide. The latest 2021 global forecast was revised from its earlier 4.2% growth target. The World Bank said, in a worst-case scenario, if infections accelerate or the vaccination process is delayed, global growth could be as low as 1.6%…
Enjoy this Week’s Round-Up;
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