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January 27, 2020

Weekly Market Commentary January 20th to January 24th 2020


World leaders and captains of industry jetted off to The World Economic Forum in Davos, Switzerland this week to (among other things) defend their views on protecting the environment. Other key topics of discussion were central bank stimulus, negative interest rates and global trade.

Existing Home Sales for December rose 3.6%, well ahead of the consensus estimate. The year-on-year change was a stellar 10.8%. Mortgage applications for home purchases remain at multi-year highs thanks to lower interest rates. Rebounding housing data has become a bright spot for the U.S. economy.

The U.S. Jobless Claims report continued to hold near multi-year lows in a tight labor market.

The 10-Year U.S. Treasury yield pulled back throughout the week, closing lower by 14 basis points to 1.68%. The yield curve experienced a meaningful flattening with the spread between the 2-Year and 10-Year U.S. Treasuries narrowing to 19 basis points. The 3-Month – 10-Year Treasury spread narrowed even more to 15 basis points.

Fears relating to the spread of the deadly Wuhan Coronavirus in China made headlines and mixed earnings reports heightened stock volatility. After breaking through new highs once again at midweek, the S&P 500 Index was lower on the week by -1.0% to 3,295. The Nasdaq took a similar path, declining -0.8% to 9,314 at the final bell.

Key economic reports next week include the first estimate of Q4 GDP, Personal Consumption Expenditures (PCE) Inflation, Durable Goods Orders and New Home Sales. The FOMC will meet as well, with no change to interest rate policy expected.