January 27, 2020

Start your week off right with our market snapshot from the Global Economics and Investment Analysis Group.

WHAT HAPPENED

• Global stocks declined -1.0% in the latest week (1.5% YTD) as concerns over the coronavirus flu in China escalated and the death toll and number of those infected increased rapidly.
• Emerging markets declined -2.4% and suffered the most (0.5% YTD) followed by developed markets who lost -0.8% (1.6% YTD).
• In the US, the S&P 500 dipped -1.0% (2.1% YTD), the NASDAQ lost -0.8% (3.8% YTD), and the Russell 2000 declined -2.2% (-0.3% YTD).
• Commodities suffered -3.1% from the heightened risk aversion led by a -7.6% drop in oil.
• Key sovereign interest rates across advanced economies retreated led by a -15 bp and -14 bp fall in the US 10-and-30-year Treasury.
• The majors dollar index advanced 0.3% and is 1.5% YTD.
• The US Markit manufacturing PMI missed estimates in January and fell for the second month in a row to 51.7 after reaching 52.6 in November, the highest since April. The services PMI surpassed expectations and gained 0.5 to 53.2, the strongest since March. We expect the manufacturing PMI to reverse course and shift higher in line with services.
• While US leading economic indicators expanded only 0.1% y/y in December, the rate of deceleration is showing signs of bottoming.
• US existing home sales jumped to 5.54 million (saar) in December and is the strongest in nearly two years. Housing continues to benefit from a healthy consumer, strong labor market, and easy financial conditions.
• The UK unemployment rate remained at 3.8% where it has hovered over the last 12-months. The Markit manufacturing PMI gained to 49.8 in January which is the highest since April but still in contraction territory. The services PMI accelerated sharply to 52.9 which is the best in over a year.
• The Eurozone consumer confidence index held steady at -8.1 in January. While this is the lowest since early 2017, we expect confidence to stabilize and gain modestly in 2020.
• Germany’s ZEW survey of growth expectations has risen sharply to the highest level since mid-2015 suggesting that the worst of the growth slowdown has passed.
• Since falling to a multi-year low in September, the Eurozone Markit manufacturing PMI has continued to top estimates and improved to 47.8 in January which is the highest since April.

WHAT'S AHEAD

• US Conference Board Consumer Confidence (Tuesday)
• US Fed Meeting (Wednesday)
• US 4Q GDP Revision (Thursday)
• China PMIs (Thursday)
• US Core Personal Consumption Expenditure Inflation (Thursday)
• Eurozone 4Q GDP Revision (Friday)
• Eurozone Inflation (Friday)
• US UMichigan Consumer Sentiment (Friday)