Weekly Market Recap (02-05 January)

<p>Tuesday</p><p>The Chinese Caixin
Manufacturing PMI for December beat expectations:</p><ul><li>Manufacturing PMI 50.8
vs. 50.4 expected and 50.7 prior.</li><li>Output and new
orders both increase at quicker rates.</li><li>firms maintain a
cautious approach to employment.</li><li>Inflationary pressures remain soft.</li></ul><p>The Canadian
Manufacturing PMI for December fell further into contraction:</p><ul><li>Manufacturing PMI 45.4 vs. 47.7 prior.</li><li>Lowest reading since
May 2020.</li></ul><p>Wednesday</p><p>The Switzerland
Manufacturing PMI for December improved slightly although it remains well in
contraction territory:</p><ul><li>Manufacturing PMI 43.0
vs. 42.1 prior.</li></ul><p>Fed’s Barkin (neutral –
voter) acknowledged the progress on inflation highlighting the 6-month Core PCE
rate falling below the 2% target:</p><ul><li>We're 'making real
progress' on inflation while economy healthy.</li><li>Six-month PCE
inflation now 'just below' 2% target'.</li><li>'You can see the
case' for a soft landing developing but it is not inevitable.</li><li>Risks include
delayed impact of high rates on credit, outside shocks, services inflation
getting stuck and strong demand.</li><li>Potential for
additional hikes remains on the table.</li><li>Suggests less focus
on path of rates and more on whether inflation continues to fall, and
economy remains strong.</li></ul><p>The US ISM Manufacturing
PMI for December slightly beat expectations with general upbeat comments
although the New Orders index fell further:</p><ul><li>ISM Manufacturing
PMI 47.4 vs. 47.1 expected and 46.7 prior.</li><li>Prices paid 45.2 vs. 49.9 prior.</li><li>Employment 48.1 vs. 45.8 prior.</li><li>New orders 47.1 vs. 48.3 prior.</li><li>Inventories 44.3 vs. 44.8 prior.</li><li>Production 50.3 vs. 48.5 prior.</li></ul><p>The US Job Openings for
November missed expectations with inside data looking even worse since the
hiring rate fell below the pre-pandemic levels. It’s worth noting that this
report is from November, so it doesn’t capture the December Fed’s pivot nor the
massive easing in financial conditions:</p><ul><li>Job Openings 8.790M
vs. 8.850M expected and 8.852 prior (revised from 8.733M).</li><li>Hires 3.5% vs. 3.7% prior.</li><li>Separations 3.4% vs. 3.6% prior.</li><li>Quits 2.2% vs. 2.3% prior.</li></ul><p>The Fed released the
Minutes of its December FOMC Monetary Policy Meeting:</p><ul><li>Participants saw
upside risks to inflation as having diminished.</li><li>Participants viewed
policy rate as likely near its peak.</li><li>Members generally
viewed addition of 'any' to statement as an indication that rates likely
near peak.</li><li>'A number' of
participants highlighted uncertainty around how long restrictive policy
would need to be maintained.</li><li>Those participants
pointed to downside risks to economy associated with an overly restrictive
stance.</li><li>Participants
observed progress on inflation had been uneven across components, noted
core services prices still rising at elevated pace.</li><li>Several participants
observed that circumstances might warrant keeping policy rate at current
level longer than they currently anticipate.</li><li>Several participants
noted the decline in the use of overnight reverse repo facility, saw this
reflecting portfolio shifts by money market funds.</li><li>Several participants
noted the risk that, if labor demand were to weaken substantially further,
the labor market could transition quickly from a gradual easing to a more
abrupt downshift in conditions.</li><li>Several participants
suggested it would be appropriate to begin discussing technical factors
about slowing balance sheet run-off well before such a decision was
reached.</li></ul><p>Thursday</p><p>The Chinese Caixin
Services PMI for December beat expectations:</p><ul><li>Caixin Services PMI
52.9 vs. 51.6 expected and 51.5 prior.</li><li>Solid increase in
service sector activity at end of 2023.</li><li>aided by the fastest
rise in new work since May.</li><li>Slight increase in employment.</li></ul><p>The US Challenger Job
Cuts for December slowed further:</p><ul><li>Job Cuts 34.82K vs.
45.51K prior.</li><li>The least in five months,
although overall there was a 98% increase in 2023 compared to 2022. </li></ul><p>The US ADP for December
beat expectations:</p><ul><li>ADP 164K vs. 115K
expected and 101K prior (revised from 103K).</li></ul><p>Change in annual pay:</p><ul><li>Job stayers 5.4% vs.
5.8% prior.</li><li>Job changers 8.0% vs.
8.3% prior.</li></ul><p>The US Jobless Claims
beat expectations across the board with Initial Claims hovering around cycle
lows and Continuing Claims stabilising around the 1850-1900K level:</p><ul><li>Initial Claims 202K
vs. 216K expected and 220K prior (revised from 218K).</li><li>Continuing Claims
1855K vs. 1883K expected and 1886K prior (revised from 1875K).</li></ul><p>Friday</p><p>The Eurozone CPI for
December missed slightly expectations:</p><ul><li>CPI Y/Y 2.9% vs. 3.0%
expected and 2.4% prior.</li><li>CPI M/M 0.2% vs. -0.6% prior.</li><li>Core CPI Y/Y 3.4%
vs. 3.5% expected and 3.6% prior.</li><li>Core CPI M/M 0.4% vs. -0.6% prior.</li></ul><p>The US NFP for December
beat expectations almost across the board with <a href="https://www.forexlive.com/news/why-us-dollar-gave-back-all-the-non-farm-payrolls-gains-20240105/">some
caveats</a> like the lower participation rate and the negative revision to the
prior report:</p><ul><li>NFP 216K vs. 170K
expected and 173K prior (revised from 199K).</li><li>Two-month net
revision -71K.</li><li>Unemployment rate
3.7% vs 3.8% expected and 3.7 prior.</li><li>Participation rate 62.5% vs. 62.8% prior.</li><li>U6 underemployment
rate 7.1% vs. 7.0% prior.</li><li>Average hourly
earnings M/M 0.4% vs. 0.3% expected and 0.4% prior.</li><li>Average hourly
earnings Y/Y 4.1% vs. 3.9% expected and 4.0% prior.</li><li>Average weekly hours
34.3 vs. 34.4 expected and 34.4 prior.</li><li>Change in private
payrolls 164K vs. 130K expected.</li><li>Change in
manufacturing payrolls 6K vs. 5K expected.</li><li>Household survey -683K
vs. 747K prior.</li></ul><p>The Canadia Labour Market
report for December was bad almost across the board besides the unemployment
rate and the average hourly wages:</p><ul><li>Employment Change
0.1K vs. 13.5K expected and 24.9K prior.</li><li>Unemployment rate
5.8% vs. 5.9% expected and 5.8% prior.</li><li>Full-time employment
-23.5 K vs. 59.6K prior.</li><li>Part-time employment
23.6 K vs. -34.7K prior.</li><li>Average hourly wages
permanent employees 5.7% vs. 5.0% prior.</li><li>Participation rate
65.4% vs. 65.6% prior.</li></ul><p>The US ISM Services PMI for
December was a big miss:</p><ul><li>ISM Services PMI
50.6 vs. 52.6 expected and 52.6 prior.</li><li>Employment index 43.3 vs. 50.7 prior.</li><li>New orders 52.8 vs. 55.5 prior.</li><li>Prices paid index
57.4 vs. 58.3 prior.</li><li>New export orders
50.4 vs. 53.6 prior.</li><li>Imports 49.3 vs. 53.7 prior.</li><li>Backlog of orders
49.4 vs. 49.1 prior.</li><li>Inventories 49.6 vs. 55.4 prior.</li><li>Supplier deliveries 49.5 vs. 49.6 prior.</li><li>Inventory sentiment 49.6 vs. 62.2 prior.</li></ul><p>The
highlights for next week will be:</p><ul><li>Monday: Switzerland CPI,
Eurozone Retail Sales.</li><li>Tuesday: Tokyo CPI, Australia
Retail Sales, Switzerland Unemployment Rate, Eurozone Unemployment Rate, US
NFIB Small Business Optimism Index.</li><li>Wednesday: Japan Wages data,
Australia Monthly CPI.</li><li>Thursday: US CPI, US Jobless
Claims.</li><li>Friday: China CPI, UK GDP, US
PPI.</li></ul><p>That’s all folks. Have a
nice weekend!</p>

This article was written by Giuseppe Dellamotta at www.forexlive.com.