10-Year Treasury Yield
The U.S. 10-year Treasury yield edged lower to 4.6194%, below last week's 14-month high of 4.809%.
Market events: Martin Luther King Jr.
To mark the birthday of Martin Luther King Jr., the chief spokesperson for nonviolent activism in the Civil Rights Movement, which protested racial discrimination in federal and state law.
Image, Martin Luther King Jr. Day. Martin Luther King, Jr., Day is observed annually on the third Monday in January. The day commemorates the life and work of Dr. King, who was a Baptist minister and prominent leader in the American civil rights movement.
US Dollar Index
The U.S. dollar slid on Friday and was set for its biggest weekly loss in over a year after President Donald Trump suggested a softer stance on tariffs against China, adding to uncertainty about the trade policy that kept equity markets on edge. US dollar rally makes Europe a 'screaming buy' vacation for Americans. A strong dollar can wreak havoc as it makes US products more expensive abroad. But the greenback's rise has been a tailwind for the major airlines as US travelers head across the pond where their dollar stretches further. The US dollar has rallied against a basket of currencies (including the euro) in recent months, touching a two-year high in January amid tariff uncertainty under the Trump administration and expectations of slower rate cuts this year.
Geopolitical Risk
Japan hikes rates to highest since 2008 as sustained inflation, rising wages signal ‘virtuous cycle’ in play. The policy rate now stands at 0.5%, its highest since October 2008.The decision was an 8-1 split, with board member Toyoaki Nakamura dissenting.Following the decision, the Japanese yen strengthened 0.6% to trade at 155.12 against the dollar, while country’s benchmark Nikkei 225 stock index rose marginally.
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MBA Purchase Applications
The refinance share of mortgage activity increased to 42.7 percent of total applications from 40.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.0 percent of total applications. The Market Composite Index, a measure of mortgage loan application volume, increased 33.3 percent on a seasonally adjusted basis from one week earlier.
Leading Indicators LEI
U.S. Leading Indicators Lose Momentum as 2024 Ends. Decline in December was in line with economists’ expectations. A decline in construction permits and low consumer confidence were among items that contributed to the deterioration last month, The Conference Board said. Photo: Getty Images A bundle of measures gauging the health of the U.S. economy fell back a little at the end of last year, reversing the boost that emerged following Donald Trump’s victory in elections to the White House. The Leading Economic Index, or LEI, published Wednesday by research group The Conference Board, dropped 0.1% in December, following a 0.3% increase in November. That was in line with the expectations of economists polled by The Wall Street Journal.
Hedging - Gold
Gold’s priceis set to close off the week with a bang, trading at $2,781 at the time of writing on Friday, and set to hit a fresh all-time high at any moment after US President Donald Trump surprised with comments the previous day casting doubts on the application of tariffs on China. The comments came after Trump had a phone call with China’s President Xi Jinping. Meanwhile, US yields are retreating after the Bank of Japan (BoJ) hiked interest rates by 25 basis points.
Jobless Claims
Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 223,000 for the week ended Jan. 18. Economists polled by Reuters had forecast 220,000 claims for the latest week. Claims were lifted by the wildfire in Los Angeles, with unadjusted applications increasing in California, but falling in the majority of states. The number of Americans filing new applications for unemployment benefits rose marginally last week, suggesting no deterioration in labor market conditions and reinforcing expectations that the Federal Reserve would not cut interest rates next week.
Commodities - Oil
Oil prices settled slightly higher on Friday but posted a weekly decline, ending four straight weeks of gains, after U.S. President Donald Trump announced sweeping plans to boost domestic production while demanding that OPEC move to lower crude prices. Brent crude futures settled up 21 cents, or 0.27%, to $78.50 a barrel. U.S. West Texas Intermediate crude (WTI) settled up 4 cents, or 0.05%, to $74.66.
Fed Balance Sheet
Level $6.853 T. Total Assets -W/W $-33.472 B. Reserve Bank Credit - W/W $-20.940 B.
Mortgage Rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.09 percent from 6.99 percent, with points decreasing to 0.65 from 0.68 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
PMI Composite Flash
The United States PMI Composite Output Index, which accounts for both services and manufacturing business activity, came in at 52.4 in January, declining from 55.4 recorded in December and hitting a nine-month low, S&P Global revealed in its preliminary report on Friday. The Flash US Services Business Activity Index dropped from 56.8 in December to 52.8 in January. Meanwhile, the manufacturing PMI stood at 50.2 in January, improving from 49.4 recorded in the previous month and expanding for the first time in six months.
Exisitng Home Sales
US existing home sales rise to 10-month high in December 2024. U.S. existing home sales increased to a 10-month high in December, but further gains are likely to be limited by elevated mortgage rates and house prices, which are keeping many prospective buyers on the sidelines. Home sales rose 2.2% last month to a seasonally adjusted annual rate of 4.24 million units, the highest level since February, the National Association of Realtors said on Friday. US existing home sales in 2024 tumble to lowest level in nearly 30 years as median price hits an unprecedented $407,500. Economists polled by Reuters had forecast home resales would rise to a rate of 4.19 million units. Sales surged 9.3% on a year-on-year basis, the largest increase since June of 2021.
Consumer Sentiment UM
US Consumer Sentiment Declines for First Time in Six Months
University of Michigan sentiment index at 71.1 in January
Long-term inflation views rose to 3.2% from December. Consumer Sentiment Dips 4% Amid Concerns About Unemployment and Inflation. Consumer sentiment edged down 4% in January, marking the first decline in six months, according to the final results for the University of Michigan’s January Surveys of Consumers. The University of Michigan said on Friday that its Consumer Sentiment Index fell to 71.1 this month from a preliminary reading of 73.2 and 74.0 in December. Economists polled by Reuters had expected an unchanged reading. The final survey was closed on Monday, the day when Trump was inaugurated for a second term as president.
S&P 500 Index - Week Performance
Open 2025 at 5,903.26 and close at 5,942.47. Positive 0.83%. S&P 500 slides on Friday as rally pauses, but stocks notch back-to-back weekly gains
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