Capital Markets Update

By Louis S. Barnes                                    Friday, January 9, 2015

Mortgage interest rates improved this past week as oil prices continue to fall sparking increased deflation concerns. In Europe, consumer prices fell 0.2% year over year in December. This was the first year over year decrease in consumer prices since October of 2009. It’s expected that the European Central Bank will announce quantitative easing at its January 22nd meeting to hopefully ward off deflation and stimulate the economy. Economic data in the U.S. was mixed. Economic data stronger than expected included the December ADP Private Jobs Report, December Non-Farm Payrolls, December Private Jobs, and the December Unemployment Rate. The unemployment rate fell to 5.6% but the Labor Participation Rate is still low at 62.7%. Economic data weaker than expected included November Factory Orders, the December ISM Services Sector Index, weekly jobless claims, December Consumer Credit, and December Average Hourly Earnings. Average Hourly Earnings fell 0.2% in December and were up only 1.7% year over year. The fall in hourly earnings puts a damper on the employment report today and may cause the Fed to further delay any rate increase.

The Dow Jones Industrial Average is currently at 17,785, down about 50 points on the week. The crude oil spot price is currently at $47.59 per barrel, down over $5 per barrel on the week.
The Dollar strengthened versus the Euro and weakened versus the Yen on the week.

Next week look toward Wednesday’s Retail Sales, Thursday’s Jobless Claims, Producer Price Index (PPI), and Philadelphia Fed Survey, and Friday’s Consumer Price Index (CPI) and Industrial Production as potential market moving events.