Weekly Market Commentary December 4th to December 8th 2023

Jobs data was the main focus of the week as investors look for signs of a slowdown in the labor market. Early in the week we saw evidence of cooling, as job openings fell to 8.7 million from a downwardly revised 9.4 million in the prior month. We also had ADP employment come in cooler than expected with manufacturers reducing headcount to the lowest level since early 2022. However, nonfarm payrolls increased 199,000, above expectations, aided by the return of striking auto workers during the month. In addition, the unemployment rate fell to 3.7%, down from 3.9%, as workforce participation edged higher. The conflicting jobs data ultimately left investors uncertain about the state of the labor market and whether or not it will start to slowdown on a consistent basis.

U.S. Services PMI and ISM services index both met expectations and remained in expansionary territory. Factory Orders fell 3.6% in October as a pullback in new orders ex-transportation and ex-defense fell more than expected. Durable Goods Orders also fell in October by 5.4%.

Jobless Claims met expectations at 220,000 and MBA mortgage applications rose 2.8%. The average 30-year mortgage rate continues to fall from the highs in October, now sitting at 7.17%.

The equity markets finished relatively flat on the week with the S&P 500 gaining 0.2% to 4,604, the Nasdaq gaining 0.7% to 14,404. Treasury yields increased on the back of Friday’s hotter-than-expected employment data. The 2-Year U.S. Treasury increased 18bps to 4.72% and the 10-Year increased 3bps to 4.23%.

Next week will be very meaningful as we will have inflation data released heading into the FOMC rate decision.