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The week in the markets -
January 6, 2023
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Welcome back:
The Week in the Markets returns
“The new year stands before us, like a chapter in a book, waiting to be written.”
– Melody Beattie, author
This week started off with the Federal Reserve Committee releasing its December meeting minutes, showing its intent to lower inflation toward its 2% target, at the risk of increasing unemployment and slowing growth. The minutes also highlighted that the Fed’s rate projections were “notably above” market expectations, which several officials argued should underscore the Federal Open Market Committee’s determination to lower inflation to its 2% goal.
Last month, the U.S. Federal Reserve extended its most aggressive tightening cycle since the 1980s. Starting from near zero in March 2022, officials increased the lending rate to a target range of between 4.25% and 4.5%, the highest since 2007.
December data for the ISM manufacturing index fell 0.6% to 48.4, which signals a contraction from the goods sector, with only two industries reporting growth: primary metals and petroleum. Although production is slowing (and has been since Q3-2022), there continue to be shortages of skilled labour, and many sectors are trying to manage head count.
This week saw more layoff announcements from Silicon Valley, where the giant customer relationship management company Salesforce let go 10% of its workforce (approximately 7,000 people). November saw similar cuts from Amazon and Meta (Facebook), while in December, Cisco and Goldman Sachs had layoffs. Even with these headline layoffs, the U.S. economy still added 235,000 jobs in December, much more than the anticipated 153,000. Average annual pay was up 7.3% from a year earlier, mostly due to big increases in the lower-paying leisure and hospitality industries.
In the energy sector, Saudi Aramco cut crude prices, a signal that demand is weak. Crude also weakened as equities fell and the dollar strengthened after a strong U.S. labour report (which could result in more rate hikes from the Federal Reserve). Crude is off its highs coming into 2023, with signals that the market is becoming oversupplied, and we’ll be watching reserve capacity and production closely over the next few months. When we look at consumption across Europe, it has been a warmer winter than anticipated, allowing for less reserve depletion; fears of supply issues and high energy prices are diminishing.
This week's market closing value - week ending January 6, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | 1-week | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 19,805.68 | 434.49 | 2.24% | 2.24% | -6.01% | 3.91% |
| S&P 500 | 3,900.66 | 74.59 | 1.26% | 1.26% | -12.25% | 9.03% |
| DJIA | 33,630.61 | 483.26 | 0.77% | 0.77% | -1.96% | 7.57% |
| FTSE 100 | 7,699.49 | 247.75 | 2.66% | 2.66% | -2.42% | -0.76% |
| CAC 40 | 6,860.95 | 387.19 | 4.65% | 4.65% | -5.78% | 3.75% |
| DAX | 14,610.02 | 686.43 | 3.61% | 3.61% | -9.39% | 1.01% |
| Nikkei | 25,973.85 | -120.65 | -1.76% | -1.76% | -15.51% | 0.31% |
| Hang Seng | 20,991.64 | 1,210.23 | 5.40% | 5.40% | -3.93% | -5.86% |
| CURRENCY RETURNS | CAD | Change | 1-week | YTD | 1-year | 5-year |
|---|---|---|---|---|---|---|
| USD | 1.3447 | -0.0092 | -0.68% | -0.68% | 5.64% | 1.61% |
| Euro | 1.4314 | -0.0182 | -1.26% | -1.26% | -0.45% | -0.84% |
| Yen | 0.0102 | -0.0001 | -1.30% | -1.30% | -7.33% | -1.50% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.25 | 0.00 | Oil | $73.66 | -$6.71 |
| 5-year | 3.24 | -0.17 | Gold | $1,866.61 | $43.19 |
| 10-year | 3.09 | -0.21 | Natural Gas | $3.74 | -$0.70 |
| CANADIAN PRIME RATE |
|---|
| 6.45% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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