Holbrook Insights

We started the week with Monday’s release of the Institute for Supply Management (ISM) Manufacturing index for January. This measure of manufacturer confidence dropped by more than expected to start the year. It fell from an upwardly revised 60.7 in December to 58.7 in January, against calls for a more modest decline to 60. Despite the drop, the January result represents a healthy level of manufacturer confidence, as the index sits well above the pre-pandemic high of 51.1 it reached in January 2020.

On Tuesday, the Conference Board Consumer Confidence Index for January will be released. Economists expect to see this gauge of consumer sentiment rise modestly from 88.6 in December to 89.1 in January. Following the four-month low set by the index in December, this result would be a step in the right direction. Still, it would leave confidence well below the post-lockdown high of 101.4 recorded in October 2020. 

On Wednesday, the National Association of Home Builders Housing Market Index for January will be released. This measure of home builder confidence is expected to remain unchanged at 86. If estimates hold, this result would be strong, tying December for the second-highest reading for the index on record and trailing only November’s all-time high of 90.

All three major U.S. indices were up despite softness in the small-cap space. Emerging and international markets performed well, as China and the EU closed in on the Comprehensive Agreement on Investment. Wednesday will see the release of the Federal Open Market Committee meeting minutes from the Federal Reserve’s (Fed’s) December meeting. As expected, no changes to the federal funds rate were made at this meeting, as Fed members largely do not expect to raise short-term rates for the foreseeable future. 

Last week saw minimal movement in the yield curve due to light trading and the holiday. On Tuesday, the Institute for Supply Management (ISM) Manufacturing index for December is set to be released. This measure of manufacturer confidence is expected to fall from 57.5 in November to 56.5 in December.

All three major U.S. indices were up last week, with the Nasdaq leading the way, rising more than 3 percent. Investors sought out large-cap and technology-oriented stocks as case counts continued to rise, particularly in California. On Wednesday, the preliminary estimate of November’s durable goods orders report is set to be released. Durable goods orders are expected to rise by 0.6 percent during the month, following a 1.3 percent increase in October.

All three major U.S. indices were down modestly last week. Domestic equity markets were affected by concerns about a government shutdown, continuous stimulus discussions, and rising coronavirus case counts. On Wednesday, the November retail sales report is set to be released. Economists expect to see sales fall by 0.2 percent during the month, following a 0.3 percent increase in October.

All three major U.S. indices were up again last week. Markets moved higher as we saw mostly positive news around vaccine distribution and a potential additional round of stimulus. 

The holiday-shortened week saw a modest pickup in yields. The 10-year Treasury yield opened at 0.82 percent and closed just shy of 0.88 percent on Wednesday. This morning, the 10-year yield opened at 0.85 percent, up 3 basis points (bps) from last week’s open. 

With coronavirus cases on the rise, investors moved into Treasuries last week, causing a drop in yields. This drop came after yields had picked up on news of positive vaccine trials.