GLOBAL MARKET SNAPSHOT
Risk assets surged into the weekend following a strong U.S. jobs report that put slowdown fears to rest (for now). Bonds didn’t react too negatively to the report leaving room for stocks to run. In the U.S., the cyclical energy +2.0% and financials +1.4% sector led the move while the utilities sector -0.2% was alone in the red.
Bonds dropped sharply on the U.S. jobs report but pared losses through the remainder of the session.
The U.S. dollar index rose +0.3% to break a five-day losing streak. Canadian dollar dropped -0.6% as its jobs report contrasted sharply to what was seen in the U.S. – the Canadian economy shed 71,000 jobs in November while the unemployment rate jumped from 5.5% to 5.9%. Japanese yen +0.2% diverged from expectations as the currency outpaced a stronger dollar despite the risk-on move. Brazilian real +1.2% strengthened following an inflation report that showed annual price growth of 3.3%, which may give pause to policymakers in the midst of an easing cycle.
The Bloomberg Commodity Index gained +0.2%, finishing off a perfect week for the first time in eight months. Copper +3.2% had its best day over gold -1.2% since September 2018. Crude oil closed out its best week since June following OPEC’s announcement that production would be reduced by an additional 500,000 barrels per day, while Saudi Arabia will take an extra 400,000 barrels per day offline.
The U.S. employment report blew away expectations as the economy added 266,000 jobs in November and the prior two months were revised up by a combined 41,000. This compares to expectations for 186,000. The unemployment rate ticked down to 3.5%.
The University of Michigan’s measure of consumer sentiment surprised to the upside as well as the headline index rose 1.4 points to 99.2 versus expectations for 97.0. Both the current conditions and expectations components contributed positively to the beat. An interesting tidbit from the release was consumer’s ambivalence towards the impeachment process and its potential economic ramifications as “virtually no consumer spontaneously mentioned impeachment in response to any question in early December--just 1%.”
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