January 13, 2020

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

WHAT HAPPENED

• Global stocks gained 0.7% in the first full week of 2020 despite heightened geopolitical tensions in the Middle East.
• Emerging markets led and gained 0.9% after delivering 18.9% in 2019 followed by developed markets who increased 0.6% following 28.4% in 2019.
• In the US, last year’s leader the NASDAQ (36.7% in 2019) gained the most and returned 1.8% followed by 1.0% for the S&P 500 as small caps lagged and finished negative (-0.2%). Commodities were lower by -0.8% led by a -6.4% fall in oil as gold was barely positive (0.1%).
• Corporate credit spreads tightened even further and sovereign interest rates of advanced economies moved higher. The USD gained 0.5% and is 1.0% YTD.
• US gained 145,00 jobs in December which was less than expected. While still strong, employment growth momentum softened throughout 2019 and finished the year with a total net gain of 2.1 million jobs, the lowest since 2011. The unemployment rate held steady at 3.5%, a half-century low. Average hourly earnings growth fell 0.2% to 2.9% y/y, which was below 3% for the first time since mid-2018.
• After reaching the lowest since mid-2016, the US ISM non-manufacturing PMI has improved to 55.0 in December, up from 53.9 in the prior month.
• Eurozone inflation was 1.3% y/y in December, up 0.3% from the prior month and the highest in six-months. 2020 inflation is expected to improve slightly.
• The European Commission Eurozone economic confidence index improved slightly in December to 101.5. Since falling to the lowest in nearly five years in October, confidence has gained for two months in a row which is the first consecutive positive streak since December 2017.
• Eurozone retail sales growth gained 0.8% to 2.2% y/y in November which is above the 2.0% average since 2016. The unemployment rate stayed at 7.5%. While it is tied for the lowest since mid-2008, the level has hovered near 7.5% since June 2019.
• German factory orders growth declined from -5.0% y/y to -5.6% y/y in November. While growth has been negative over the last 18-months, it appears the rate of contraction has likely stabilized and could shift higher in 2020.
• Japan’s index of leading economic indicators continues to weaken and in November reached the lowest since the end of 2009.

WHAT'S AHEAD

• China Trade (Tuesday)
• US Small Business Optimism (Tuesday)
• US Inflation (Tuesday)
• Eurozone Industrial Production (Wednesday)
• China Retail Sales, Industrial Production, 4Q GDP (Thursday)
• US Retail Sales (Thursday)
• US Industrial Production (Friday)
• US UMichigan Consumer Sentiment (Friday)