Daily Market Commentary for January 12, 2012
U.S. Labor Department reported new applications for unemployment benefits jumped last week to the highest level seen since late November, most likely because of end-of-the-year layoffs following the holiday season. (read more at Millennium-Traders.Com)
Commerce Department reported U.S. business inventories grew 0.3% in November to $1.55 trillion after a 0.8% advance in October. Inventories are up 8.5% compared to November 2010 and the ratio of inventories to sales remained at 1.27 during the month.
On derivatives regulation, Volcker rule, potential money market fund reforms and other important matters will help ensure that the regulators get the "rules right," U.S. Chamber of Commerce president Thomas Donohue said Thursda as part of his annual state of American business address. Donohue additionally said he and the chamber were "disappointed" to see President Barack Obama install a new director for a controversial new consumer-watchdog bureau, without the "advice and consent" of the Senate. "We're not opposed to the director, we want to change the process so that one person didn't control this whole system," Donohue said. Freddie Mac reported mortgage rates have hit record lows once again, following "mixed" labor-market indicators. In week ended January 12, the average rate on the 30-year fixed-rate mortgage fell to a record low of 3.89% compared with 3.91% in previous week. To obtain the latest rate, payment of an average 0.7 point was required with a point being 1% of the mortgage amount, charged in prepaid interest. "Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated," said Frank Nothaft, Freddie's chief economist, in a statement. During 2011, the 30-year rate was at 4.71%. In the latest week the 15-year fixed-rate mortgage fell to a record low of 3.16% from 3.23% in previous week - based on data going back to 1991. The average rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage declined to a record low of 2.82% from 2.86% based on data going back to 2005. The 1-year Treasury-indexed ARM fell to a record low of 2.76% from 2.80% based on data going back to 1984.
European Central Bank President Mario Draghi said that the euro-zone economic outlook remains subject to high uncertainty and substantial downside risks, such as further intensification of tensions in the debt markets. Draghi said recent survey data pointed to "tentative signs of stabilization in activity at low levels" but - it was hard to make a confident judgment based on those preliminary data. Draghi added that the bank's monetary stance remains accommodative: "Uncertainty is very high and we will monitor all developments and we will stand ready to act." The ECB voted unanimously to keep interest rates on hold.
The Treasury Department reported that U.S. Deputy Treasury Secretary Neal Wolin met with Philippine government officials - Philippine Finance Secretary Cesar V. Purisima, Budget Secretary Florencio B. Abad, and Commissioner of Internal Revenue Kim Henares - to discuss regional economic developments and the outlook for the global economy. Officials "reaffirmed their commitment to pursue policies that strengthen global economic recovery and support strong, sustainable, and balanced global growth." Philippine officials outlined planned economic reforms and Wolin said Treasury would provide technical assistance in their reform efforts.
The Commerce Department reported sales at U.S. retailers increased 0.1% during December. Commerce said sales rose to a seasonally adjusted $400.6 billion, an advance of 6.5% from previous year. Government statistics do not match the conventional wisdom, as often happens in the retail sales reports immediately after the holidays. The strongest sector of holiday shopping season was electronics however, data showed a 3.9% monthly decline at electronic stores. Online retailers fell 0.4% and sales at the nationís malls were lower in December. General merchandise stores sales fell 0.8%, including a 0.2% decrease at department stores while sales at clothing stores rose 0.7%. Sales rose an upwardly revised 0.4% during November, compared with a 0.2% increase originally reported and sales were revised up slightly in October. Sales data is seasonally adjusted, but not for price changes. Excluding a 1.5% rise in motor vehicles sales, retail sales for the month fell 0.2%, much weaker than the 0.3% gain expected. Sales at gasoline stores fell 1.6% in December. Core sales, which exclude autos, gasoline, and building materials, fell 0.2% during December - striking first drop in core sales in 2011. Motor vehicle sales rose 1.5% in December after rising 0.9% in November. Furniture store sales rose 1.0%. Sales at electronics and appliances stores fell 3.9%. Building materials and hardware store sales jumped 1.6% after falling 1.0% in November. Sales at stores catering to leisure-time pursuits, such as hobbies, sports and reading, fell 0.4%. Sales at health and personal-care stores rose 0.6%. Sales at food and beverage stores fell 0.2%. Sales at restaurants and bars rose 0.7%. Sales at non-store outlets, such as catalogs and online stores, fell 0.4%.
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