This Weekly Market Update reviews the top market headlines; ISM Indices Signal Continued Economic Recovery, New Restrictions Slow Job Growth, U.S. Treasury Yields Hit Highest Level Since March
  • The ISM Manufacturing Index rose to 60.7 in December, its highest reading since August of 2018
  • The U.S. economy lost 140,000 jobs in December, ending seven months of jobs growth.
  • The benchmark 10-year U.S. Treasury bond yield rose above 1% last week for the first time since March

Top Three Market Headlines 

ISM Indices Signal Continued Economic Recovery: The U.S. economy continued its recovery in December, according to surveys of business executives released last week from the Institute of Supply Management (ISM). The ISM Manufacturing Index rose to 60.7 in December, its highest reading since August 2018, up from 57.5 in the prior month. (A reading above 50 indicates expansion of activity while a sub-50 mark reflects contraction). The services sector also expanded in December, as the ISM Services sector registered 57.0 for the month, up from 55.9 in November. This marked the seventh consecutive month each index has signaled expansion.

New Restrictions Slow Job Growth: The Labor Department last week reported that U.S. nonfarm payrolls fell by 140,000 in December, ending seven months of U.S. jobs growth. Leisure and hospitality sectors were hit the hardest, losing 498,000 jobs in December, as new COVID-19 restrictions were introduced in parts of the country. Elsewhere, however, the jobs report recorded strong growth in Professional & Business Services, Manufacturing, and Retail. Meanwhile, the unemployment rate held steady at 6.7%, though it remains well above the February pre-pandemic rate of 3.5%.

U.S. Treasury Yields Hit Highest Level Since March: The benchmark 10-year U.S. Treasury bond yield rose above 1.0% last week for the first time since March of last year, settling at 1.12% at week’s end. After hitting 0.54% in early August, Treasury yields, which play a significant role in setting interest rates for everything from corporate bonds to mortgages, have risen steadily as the economy has gradually recovered and the market’s expectations for future inflation have increased. In addition, greater government borrowing necessitated by higher levels of government spending contributes to higher yields as the supply of Treasury bonds increases.

 

As of January 8, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 2.70% 2.71% 2.71% 19.05%
S&P 500 1.88% 1.88% 1.88% 19.76%
Russell 2000 5.93% 5.93% 5.93% 27.42%
MSCI EAFE 3.16% 3.16% 3.16% 11.67%
MSCI Emerging Markets 4.79% 4.83% 4.83% 24.37%
FTSE NAREIT -2.54% -2.54% -2.54% -9.29%
Bloomberg Commodity 2.06% 2.06% 2.06% -0.79%
Barclays U.S. Aggregate -0.94% -0.94% -0.94% 6.41%

WSJ 1/8/2021,MarketWatch 1/6/2021,Capital Economic 1/8/2021 Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.