The December employment report was released last week and the data proved weaker than expected after several strong readings over the past few months. For the month, 145,000 new jobs were created, less than the anticipated 160,000. Average hourly earnings also grew at a slower pace than expected (0.1% versus 0.3%). The unemployment rate remained at 3.5%. Despite the release of this weak data, the stock market moved to new highs during the week as tensions between the U.S. and Iran eased.
The upcoming week starts this quarter’s earnings season, with many of the large banks reporting results. I expect earnings will continue to be sluggish but in line with reduced expectations. In 2019, equities saw significant multiple expansion as the Federal Reserve (Fed) lowered interest rates. I expect this trend to continue in early 2020; however, as the year plays out, earnings will become more important to further gains in equities.
Treasury yields will likely continue to be range-bound as growth and inflation remain stable. I don’t expect any Fed interest rate changes during the course of the year.
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