- 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.