The start of 2019 was volatile, as concerns about the economy and markets drove stocks lower. This all reversed last Friday, however, with a very strong December employment report. The data was impressive by almost any measure, with 312,000 new jobs, a 0.4% increase in average hourly earnings and a 0.2% increase in the labor market participation rate. Stocks reversed early declines on anticipation that the economy may be better positioned to perform in 2019. Also impacting markets is the expectation for Federal Reserve (Fed) policy in the new year.
This week, the markets will receive two key pieces of information from the Fed: minutes from the December meeting on Wednesday and Fed Chair Powell’s speech on Thursday. Both will be widely scrutinized and have the potential to create further market volatility. Additionally, markets will continue to digest more back and forth news about the government shutdown and trade talks with China.
I expect volatility to remain elevated until a comfort level with monetary policy is reached.
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