Weekly Recap – Jan 4-8

The year 2020 is over, and many hopes that the pandemic will end as well, but the economic impact of the Corona pandemic continues with the lockdowns in most major economies, the path back to pre-pandemic levels is an unpaved road. The greenback is showing some stability with hopes for further stimulus and easing, but it has room to fall in the coming weeks.

Eurozone Inflation continues to struggle, the annual reading of Eurozone CPI came in at -0.3% in December, missing expectations of -0.2% and -0.3% previous. The core figures came in at 0.2% in the reported month when compared to 0.2% expectations and 0.2% seen in November.

In the UK, manufacturing activity improved better than expected in December as the IHS Markit/CIPS Manufacturing PMI was revised higher to 57.5 in December versus 57.3 expected and a preliminary 57.3. As for the services PMI, it was revised lower than expectations to 49.4 in December compared estimates of 49.9 and a preliminary 49.9, which shows that the service sector activity in the United Kingdom contracted more than expected.

In the US, manufacturing activity expanded at its strongest pace since September 2014, Markit’s manufacturing PMI reading came in at 57.1 from 56.7 in November and better than expectations of 56.5.

Further details of the publication showed that the Final Output Index edged lower to 58.3 from 59.2 and the Final Output Prices Index rose to its highest level since May 2011 at 58.6.

Service sector activity improved at a weak pace, IHS Markit Services PMI retreating to 54.8 from 58.4. This reading came in lower than the flash estimate and the market estimates of 55.3.

In Canada, the business activity in the manufacturing sector continued to expand at a solid pace in December with the IHS Markit Manufacturing PMI improving to 57.9 from 55.8 in November. This is the highest reading since the survey began in October 2010.

Nonfarm Payrolls (NFP) in the US fell by 140,000 in December. This reading followed November’s increase of 336,000 (revised from 245,000) and missed the market estimate of 71,000+ by a wide margin.

Further details of the publication revealed that the Unemployment Rate stayed unchanged at 6.7% and the Average Hourly Earnings rose by 0.8% on a monthly basis, compared to analysts’ estimate of 0.2%. the Labor Force Participation Rate remained steady at 61.5%.

Employment in Canada declined by 62,600 in December, compared to analysts’ estimate of 27,500, and the Unemployment Rate ticked up to 8.6% from 8.5% in November as expected, Statistics Canada reported.

Stocks

In Europe, the stock market saw its best week in about two months, with the pan-European index STOXX 600 gaining about 3%.

Meanwhile, Wall Street broke all-time records during both of the last two sessions of the week, with the three main indices showing a strong performance despite the political unrest, with increased hopes for an increased government stimulus spending after the Democrats took control of the government after winning the majority of the Senate seats following their win in Georgia.

Treasury Yields

After data by the Department of Labor showed an increase in job losses, despite a stability in the unemployment rate, the expectations for extra stimulus were increased. Treasury yields rose significantly with the benchmark 10-year noted registering their biggest weekly rise since June of last year, after adding 19.2 basis points to reach 1.105.

Similarly, the yield on the 30-year notes rose by 22.1% over the week, while the two-year bonds saw an increase in yields by 1.6%.

cryptocurrency

Bitcoin jumped more than 5% on Friday (January 8th) to a new record high at $ 41,530.

The most popular cryptocurrency in the world fell to a low of $36618.36 on the Bitstamp exchange before rising. The rival cryptocurrency Ethereum rose 3% before falling more than 10%.

Bitcoin rose about 1000% from a low it hit in March. It topped $30,000 for the first time on January 2, after surpassing $20,000 on December 16.

Growing demand from institutions, companies, and more recently retail investors have boosted Bitcoin’s rise, as they are drawn to the prospects of a quick payoff in a world of drastically low returns and negative interest rates.

JPMorgan economists wrote on January 5 that the digital currency is emerging as a competitor to gold and could trade as high as $ 146,000 if it consolidates its position as a safe investment asset.

Interest in the world’s largest cryptocurrency has increased in the past year as investors view Bitcoin as a hedge against inflation and an alternative to the depreciation of the dollar.

Bitcoin digital currency began to gradually abandon its new record levels of $ 40,000, Sunday, January 10, to start a new journey in trading near $ 39,400.

Coronavirus Update

British Health Minister Matt Hancock said Sunday, January 10 that his country had vaccinated nearly two million people with the COVID-19 vaccine before the dosing intensified on Monday.

Britain aims to vaccinate about 14 million by mid-February, including those over the age of seventy, and the most vulnerable, meaning the elderly and those with pre-existing illnesses, and health and social care workers.

Hancock said about 200,000 people were getting vaccinated every day right now, which puts Britain on track to achieving its goal and provides an opportunity to begin easing restrictions in the spring.

In light of the presence of a new highly contagious strain of the virus in Britain, Prime Minister Boris Johnson imposed third general isolation in England, the most populous region of the United Kingdom, in an attempt to curb the pandemic before vaccinating all those most vulnerable to the disease.

More than 80,000 people died from the disease in Britain within 28 days of their diagnosis, which is the fifth-largest death toll from the virus in the world.

In Belgium, official data published on Sunday, January 10, showed that the death toll from the Coronavirus in the country, which is one of the highest death rates compared to the population in the world, has exceeded the barrier of 20 thousand cases.

The Brazilian Ministry of Health said that it had recorded 62,290 new confirmed cases of coronavirus and 1,171 deaths within 24 hours.

Ministry data indicates that the total number in the country exceeded eight million cases

Oil

A huge decline in crude inventories in the United Stated provided more support to that by the recent OPEC+ agreement to curb output, which led to Brent futures rising by more than 8%, while WTI recorded weekly gains of 7.7%.

OPEC+ reached an agreement on Tuesday to curb output in February, as suggested by Saudi Arabia, with the Kingdom voluntarily choosing to apply larger production cuts.

The Kingdom believes maintaining production curbs is essential to restoring the global oil market balance, despite an improved outlook due to the rollout of Coronavirus vaccines.

Gold

Gold prices declined on Friday, seeing their worst daily losses since last November, amid another surge in U.S. Treasury yields and the rebound of the U.S. Dollar (USD).

Gold futures for February delivery dropped by $78.20, or 4.1%, and finished at $1,835.40 per ounce.

The surge in Treasury yields and rebound signs by the U.S. Dollar (USD) led the yellow metal to turn to weekly losses as the week concluded.

The most-active gold futures gave up the $1,900 per ounce mark and declined by more than 3% to finish the week at $1,835.40 per ounce.

For the week, the yellow metal futures have turned into a decrease of about 3.2%.

US

A little over two months after the recent presidential elections in the United States, the transition of power to a new administration continued to dominate the events of the passing week.

As the U.S. Congress was about to ratify the results of the elections, a group of Trump supporters stormed the Capitol in what has been described as a domestic terrorist attack on American democracy and an act of insurrection.

The attacks have led to the suspension of Donald Trump’s accounts on various social media platforms, as he has been accused of inciting the violence, alongside a group of Republican politicians.

Although it is only a couple of weeks before the inauguration of Joe Biden as the 46th president of the United States, there have been calls for a second impeachment by Congress of removing Trump from his office by his cabinet as per the 25th amendment to the U.S. Constitution.

Democratic Representative Ted Lieu said Saturday, January 9 that Democrats in the US House of Representatives will introduce legislation on Monday that calls for the impeachment of President Donald Trump.

US House of Representatives Speaker Nancy Pelosi said Friday that she has spoken with the chairman of the Joint Chiefs of Staff about taking precautionary measures to ensure that President Donald Trump cannot conduct hostilities or order a nuclear strike while he remains in power.