10 Things You Need to Know: January 14, 2025
Key data releases this week include: NFIB Small Business Optimism (Tue), PPI (Tue), CPI (Wed), Beige Book (Wed), retail sales (Thu), NAHB Housing Market Index (Thu), housing starts (Fri), and capacity utilization (Fri).
Trading Economics
January 10, 2025
December payroll employment gains of 256,000 far exceeded expectations of a 150,000 rise. The unemployment rate edged down to 4.1% in December from 4.2% in November. Markets had expected an unchanged reading of 4.2%. Average hourly earnings rose by 3.9% (y/y) in December, following a 4% rise in the prior month and slightly below market estimates of a 4% gain.
Bloomberg
January 7, 2024
The ISM Services PMI rose to 54.1 in December 2024 from 52.1 in November, above market expectations of 53.3. The reading marked the 10th time the composite index has been in expansion territory this year. The measure of prices paid for materials and services rose more than 6 points to 64.4.
Trading Economics
January 10, 2025
The University of Michigan consumer sentiment for the US fell to 73.2 in January 2025 from 74 in December which was the highest in eight months, and below forecasts of 73.8, preliminary estimates showed. Year-ahead inflation expectations soared to 3.3%, the highest in eight months, from 2.8% in December and long-run inflation expectations also rose to 3.3% from 3%.
Capital Economics
January 10, 2025
We expect the euro-zone economy to grow at only a sluggish pace this year. However, the continued strength of services inflation means ECB policymakers will feel in no hurry to slash interest rates, but we still think the deposit rate will fall from 3.0% currently to 1.5% in Q3. Meanwhile, the recent rise in euro-zone government bond yields has been fairly indiscriminate, but we think that French and Italian spreads will widen this year.
Barron’s
January 13, 2024
Federal-funds futures are pricing in no cuts in policy rates through June from the target range of 4.25% to 4.50% set at December’s meeting, and a single trim of 25 basis points by December. A month ago, futures were pricing in two 25-basis-point cuts by midyear and possibly a third by year end.
Barron’s
January 13, 2024
Stock market bears point to levitating bond yields, which reflect fears of resurgent inflation, and levitated equity valuations, which have left the market priced for perfection. The pessimists worry, as well, about the inexorable growth of government debt and the policy uncertainty that attends any change in Washington, D.C., especially the sea change promised by incoming President Donald Trump.
Barron’s
January 13, 2024
Market optimists expect stocks to keep rising, powered by a strong economy, double-digit earnings growth, government deregulation, an ensuing wave of mergers and acquisitions, and the widespread adoption of artificial intelligence by companies not only large but medium-size and small. The price action may be choppy, they say, but the ingredients for more gains are, or soon will be, in place.
WSJ, CNBC, AP
January 8, 2024
Federal Reserve officials have expressed the need for a cautious approach to future interest rate cuts, citing the risk of persistent inflation above the 2% target, according to minutes from the December meeting. The Fed lowered the main rate to 4.25% to 4.5% in December but projected only two more cuts in 2025.
Barron’s
January 9, 2024
Elon Musk and his DOGE co-head Vivek Ramaswamy have floated the idea of cutting $2 trillion from the Federal budget. However, he recently said, “I think that’s the best-case outcome. I think we try for $2 trillion. We’ve got a good shot at getting $1 [trillion].”