10-Year Treasury Yield
The 10-year Treasury yield was down slightly on Tuesday to 4.521%. That is up from 4.178% at the end of November. A weak December for stocks has coincided with the back end of the Treasury curve climbing. The move in rates, due in part to changing expectations around Federal Reserve rate cuts, could be hurting optimism for stocks...
Chicago PMI
Chicago PMI falls to 36.9, signaling sharp manufacturing contraction and bearish pressure on the U.S. dollar. Analysts forecasted a PMI of 42.7, but the actual reading of 36.9 reflects deeper economic struggles. The PMI drop below last month’s 40.2 suggests ongoing manufacturing weakness in the Chicago region. A sub-50 PMI signals contraction, raising concerns about the broader U.S. manufacturing sector. Bearish PMI data hints at potential ISM manufacturing PMI weakness, impacting USD sentiment.
Pending Home Index
Contracts to buy U.S. previously owned homes rose more than expected in November, notching a fourth straight month of gains as buyers focused on taking advantage of improved inventory despite stubbornly high mortgage rates.The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on signed contracts, rose 2.2% last month to 79.0 - the highest since February 2023 - from 77.3 in October. Economists polled by Reuters had forecast contracts, which become sales after a month or two, would rise 0.9% after increasing 1.8% in October. Pending home sales rose 6.9% from a year earlier. On a regional basis, the Midwest, South and West saw monthly increases while contract signings slipped in the Northeast. All four regions posted annual gains.
US Dollar
The ICE U.S. Dollar Index enters the final day of December up 6.61% in 2024, which will mark the greenback’s third positive year in four. All of those gains have come in the fourth quarter, when the index is up 7.20%, which is on track to be the best quarterly performance since 2015. The late-year jump for the dollar has come as traders have dialed back their expectations for Federal Reserve rate cuts in 2025 and after President-elect Donald Trump’s win in November. In general, higher rates from the Fed and higher tariffs are expected to result in a stronger dollar.
S&P Case Shiller Index
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.6% annual return for October, down from a 3.9% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.8%, down from a 5.2% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.2%, dropping from a 4.6% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in October, followed by Chicago and Las Vegas with annual increases of 6.2% and 5.9%, respectively. Tampa posted the smallest year-over-year growth with 0.4%
FHFA House Price Index
FHFA House Prices Rise 0.4 Percent in October; Up 4.5 Percent from a Year Earlier. U.S. house prices rose 0.4 percent in October, according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted monthly House Price Index (HPI®). House prices rose 4.5 percent from October 2023 to October 2024. The previously reported 0.7 percent price growth in September remained unchanged. Annual house price gains have been trending down since February, stabilizing around 4.5 percent during the last three months.
Geopolitical Risk
New Orleans’ famed Bourbon Street devolved into a grisly crime scene just hours into the new year as a driver plowed a three-ton pickup truck through crowds of holiday revelers, killing at least 14 people and injuring dozens of others in what the FBI is investigating as a possible act of terrorism.
Alcoholic drinks should carry a warning about cancer risks on their label, the U.S. Surgeon General said in a move that could signal a shift towards more aggressive tobacco-style regulation for the sector.
Israeli air strikes ramp up Gaza death toll amid new truce push. Israel carried out air strikes on dozens of Hamas targets in Gaza over the past 24 hours, it said on Friday, in attacks that Palestinian health authorities said had killed nearly 100 people.
New Year 2025
Through Monday’s close, there have been 57 record closes for the S&P in 2024, 47 for the Dow and 38 for the Nasdaq Composite. The S&P 500 surged 23.31% in 2024, building on a gain of 24.2% from last year. The two-year gain of 53% is the best since the nearly 66% rally in 1997 and 1998. Despite going out of 2024 with a whimper, the S&P 500 is still poised for a 24% gain for the second straight year. Consecutive gains of 20% or more are extremely rare. It has only happened three other times for the S&P 500: 1935-36, 1954-55 and 1996-98 (the only time it saw 20% gains three years in a row). Meanwhile, the Dow added 12.88% in 2024, while the Nasdaq has outperformed with a gain of 28.64%. The enthusiasm surrounding AI and its potential productivity boost helped power the major averages to a string of record highs throughout the year. AI chip darling Nvidia and iPhone giant Apple — members of the so-called Magnificent 7 — rose 171% and 30%, respectively, and notched new highs of their own in 2024. Developments in Washington, D.C., helped fuel the rally in the second half of the year. The Federal Reserve has cut its benchmark interest rate by a full percentage point since September, bolstering confidence that the U.S. economy can sustain its recent growth. Stocks also rallied sharply following President-elect Donald Trump’s win in November, as traders cheered the prospect of lower taxes and a looser regulatory approach under a Republican administration. Meanwhile, bitcoin has performed even better than the stock market, up 119% for the year. Notably, the cryptocurrency topped $100,000 for the first time this year
Gold Hedging
The price of Gold ended London trading on Tuesday with a gain of 26.6% from last New Year's Eve while silver added 21.5% for the year as the global bullion markets closed for the 2025 celebrations. Gold delivered one of its best performances in a decade in 2024 recording an annual growth of 26%, fuelled by central bank purchases, geopolitical tensions, and expectations of accommodative monetary policies by global central banks, including the Reserve Bank of India (RBI). Gold price (XAU/USD) holds losses for the third consecutive day amid thin trading volume on the last trading day of the year. Gold prices are set to finish the year with an impressive 27% gain, representing their strongest annual performance since 2010. This rally has been driven by central bank purchases, rising geopolitical tensions, and monetary easing policies implemented by major central banks.
MBA Purchase Applications
Mortgage Applications Decreased Over a Two-Week Period in Latest MBA Weekly Survey. The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 55 percent compared with two weeks ago. The holiday adjusted Refinance Index decreased 36 percent from two weeks ago and was 10 percent higher than the same week one year ago. The unadjusted Refinance Index decreased 62 percent from two weeks ago and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 13 percent compared with two weeks ago. The unadjusted Purchase Index decreased 48 percent compared with two weeks ago and was 17 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 39.4 percent of total applications from 44.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2 percent of total applications.
Jobless Claims
First-time U.S. unemployment claims fell to an 8-month low as 2024 wound down. Initial applications for US unemployment capped 2024 at an eight-month low, reflecting the relatively muted levels of job cuts in a labor market that has remained surprisingly resilient. New claims fell by 9,000 to 211,000 in the week ended Dec. 28, lower than all but one estimate in a Bloomberg survey.
PMI Mfg Final
USA: manufacturing PMI declines slightly in December. U.S. December Manufacturing PMI Exceeds Expectations. According to Odaily, market reports indicate that the final U.S. S&P Global Manufacturing PMI for December was recorded at 49.4. This figure surpasses the anticipated 48.3 and matches the previous value of 48.3. The seasonally adjusted S&P Global US Manufacturing. Purchasing Managers' Index™ (PMI®) posted 49.4 in. December, down from 49.7 in November 2024The US manufacturing PMI - calculated by S&P Global - fell to 49.4 last month from 49.7 in November, and thus dipped slightly below the 50 threshold that marks the boundary between expansion and contraction in the sector's activity. After approaching stabilization in the previous month, December saw a sharper decline in new orders, according to S&P Global, which also points to a sharper reduction in production and an acceleration in the rise in input costs.
Construction Spending
US reports construction spending unchanged in November 2024. U.S. construction spending was unchanged in November as a moderate rise in single-family homebuilding was offset by a sharp decline in outlays on multi-family housing projects. The Commerce Department's Census Bureau said on Thursday the unchanged reading in construction spending followed an upwardly revised 0.5% rise in October. Economists polled by Reuters had forecast construction spending would gain 0.3% in November after a previously reported 0.4% rise in October. Construction spending increased 3.0% on a year-on-year basis in November. Spending on private construction projects edged up 0.1% after increasing 0.6% in October. Investment in residential construction nudged up 0.1%, with outlays on new single-family projects rising 0.3%.
Oil - Commodity
In the U.S., crude inventories fell by 1.2 million barrels to 415.6 million last week, missing expectations of a 2.8 million barrel draw. Refineries ramped up output, boosting gasoline and distillate inventories, but overall fuel demand dipped to a two-year low. Despite the inventory miss, traders remain focused on potential interest rate cuts by the Federal Reserve. Lower rates are expected to stimulate economic activity and fuel oil demand by reducing borrowing costs and encouraging consumption. Crude oil futures hold gains after surpassing the 200-day moving average, with a next target of $77.36 in sight. China’s $20B wage boost signals economic support, driving oil demand and reinforcing bullish market sentiment. U.S. crude inventories fell by 1.2M barrels, below expectations, as refineries increased output despite weak fuel demand.
Fed Balance Sheet
Level $6.853 T. Total Assets -W/W $-33.472 B. Reserve Bank Credit - W/W $-20.940 B.
Mortgage Rates
Mortgage rates moved higher through the last full week of 2024, reaching almost 7 percent for 30-year fixed-rate loans. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.97 percent from 6.89 percent, with points increasing to 0.72 from 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
ISM Mfg Index
US ISM Manufacturing PMI improves to 49.3 in December vs. 48.4 expected. The business activity in the US manufacturing sector continued to contract, albeit at a softening pace in December, with the ISM Manufacturing PMI rising to 49.3 from 48.4 in November. This reading came in better than the market expectation of 48.4.
S&P 500 Index - Week Performance
Open 2025 at 5,903.26 and close at 5,942.47. Positive 0.83% |
