A sterling jobs report released Friday morning pushed equities in the U.S. to overcome meager data unveiled earlier in the week. The addition of 321,000 jobs in November beat forecasts by more than 75,000.
Mario Draghi disappointed a small segment of economists and analysts who were expecting the ECB leader to unveil a program of sovereign bond purchases. No such plan was announced but Mr. Draghi remains dovish and markets are expecting an expanded QE program in January, so long as the European Court of Justice does not rule Outright Monetary Transactions as directly financing governments, which would be a violation of EU law.
Data out of Europe was mixed this week. Unemployment rates are growing, reaching a four-decade high in Italy. German factory orders showed considerable growth on Friday but the Bundesbank lowered growth estimates for 2015.
Japan’s debt rating was cut on Monday by Moody’s. The ratings agency cited the country’s debt dynamics and precarious policy endeavors.
China reported its lowest PMI in 8 months this week. Nevertheless Shanghai has risen over 20% the past month, primarily driven by greater stimulus expectations. The Yen reached a 7 year low versus the dollar on Friday.
The Australian dollar has reached a 4 year low. Economists are increasingly expecting an interest rate cut in the future as the economy’s commodity foundation has been stricken.
While longer-term bonds have traded in a consistent range over the past few weeks in the U.S., shorter maturities have risen. The flatter yield curve has boosted the Financial sector according to some onlookers.
Energy prices fell again this week. After leading the position to keep production steady at last week’s OPEC meeting Saudi Arabia is alleged to have cut its prices to American customers.