January 23, 2024: Key Market Indicators
1. The Bureau of Labor Statistics reported nonfarm payroll additions of 216,000 for the month of December, slightly above the 6-month moving average of 193,000. The unemployment rate was 3.7%, unchanged from November. There were 6.3 million unemployed workers in December versus 8.8 million available jobs, which may be inflationary.
2. The U.S. Treasury yield curve (10-year yield minus the 2-year yield) remains inverted at -26 basis points, up from -38 basis points at the end of December. Curve normalization was driven by long-end rates rising faster than short-end rates.
3. The Conference Board’s Leading Economic Index reading was -7.1% in December, an improvement from the 2023 low of -8.1%.
4. The U.S. ISM Services PMI for December was 50.6%. A reading above 50 indicates an expansion; the sector has grown in 42 of the last 43 months, with the lone contraction in December 2022. Nine out of eighteen industries reported growth in December.
5. The U.S. ISM Manufacturing PMI for December was 47.4%, a slight improvement from November’s 46.6%, indicating a slower rate of contraction. The manufacturing sector has been in a recession with 14 consecutive months of contraction. Out of seventeen manufacturing industries, only primary metals reported growth in December.
6. According to the National Association of Realtors, pending home sales were -1% y/y in December, a material improvement from last December’s -34% y/y. The average 30-year mortgage rate is 6.98%, below the one-year moving average of 7.22%.
7. The AAII (American Association of Individual Investors) Sentiment Survey reports 40% bullish and 27% bearish, for a spread of +13%. The current CNN Fear and Greed index reading is 73.
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