Market Synopsis: Equities down, Treasury Yields down, Commodities mixed, Dollar up, Crypto up
Past Week Events:
- There were minimal macroeconomic catalysts to drive markets this week. However, the Producer price index final demand, provided another measure of inflation. However, unlike the CPI which provides inflation from the perspective of the consumer PPI provides perspective from the producer or manufacturers of goods and products. The index fell by a half percent in December. This was the largest drop since 2020 and significantly beat estimates. The Dow Jones estimate was a decrease of 0.1 percent. The excellent beat in expectations raised hopes that inflation is cooling.
- PCE price index measures how much consumers are spending for their goods and services. This data point reveals information about how inflation is affecting the market, because this data point excludes random volatility in price changes of specific goods to only specifically target inflation’s impact. This data point is very similar to CPI, and like CPI is very important to measuring inflation. Next week’s PCE index will set the tone for the end of the week, as it is released on Friday.
Market Snapshot:
- Markets had a roller coaster of a week as stocks fell into about the middle week where optimism seemed to return to stocks. Stocks rallied to the point that the major indices almost recovered losses seen earlier in the week. The major catalyst for this late-week rally can be attributed to massive option expirations today. This may seem complicated but put simply there were many bets placed on markets expiring today. When these bets get close to expiration trading activity increases and wild swings like we saw this week can take place. It is also interesting to note that cryptocurrencies have rallied massively for the past few weeks as Bitcoin has been up 16 out of the past 17 days at about $22,000.
U.S Equities:
- Indexes(Week)
SPX 3,972.61(-0.66%), DJIA 33,375.49(-2.70%),
NASDAQ 11,140.43(0.55%), RUT 1,867.34(-1.04%)
- Sectors
- The sectors were pretty mixed this week with about half in the green and the other half in the red. Most notably, the Communications sector outpaced all others closing the week up almost 3 percent. On the other end of the spectrum, Consumer Staples, Industrials, and Utilities all closed down over 2 percent on the week.
Individual ETF to Note(EVERY OTHER WEEK)
Treasuries:
- Treasury yields followed a similar pattern as stocks this week as they got hammered down earlier in the week but about mid-week rallied higher. However, the rally was not enough for most treasuries to make it back in the green on the week. Only the 30 Year Treasury was able to make it back into the green on the week.
Commodities:
- Oil
- Most commodities rallied higher on the week Oil included. Oil came down hard on Wednesday but seemed to get caught up in the stock market rally recovering to its highs on the week.
Gold
- Gold closed the week out with a nice gain of about 2 percent. Gold is currently sitting at its highest levels since April 2022. It dropped several times to 1900 but held strong.
BTC -22,310, 12.58%% ETH - 1,635.78, 12.34%
- Bitcoin is soaring on the week. Bitcoin is sitting over $22,000 a coin now. These levels have not been seen since August of 2022. There seems to be no concrete reason as to what is driving this massive rally.
Europe:
Stoxx 600- 452.12, -0.09% DAX -15,033, -0.35% FTSE 100 -7,770, -0.94%
Chart of the DAX (5-day)
- Robert Holzman, member of the European central bank, expressed in an interview recently that the ECB has no intention of slowing down there increase of interest rates this year despite inflation’s recent cooldown.
Asia:
XJO (Australia)-7,452, 1.69% Shanghai 180 Index-8,805, 2.16% Nikkei 225- 26,553, 1.66%
XJO 5-day Chart
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