Market Action

•  A strong jobs report published Friday could not assuage markets, pushing them down overall on the week and 2015 so far. While the headline jobs growth exceeded forecasts wage growth slipped in December, continuing a worrying trend.
• Volatility remains elevated in American markets. The Dow saw triple digit declines Monday and Tuesday but recovered the losses by Thursday’s close. Liquidity is also inconsistent, especially in the high-yield market.
• European markets officially entered into a deflationary period according to the latest pricing data from the Continent. Year over year price declines through December provide additional reason for Mario Draghi and the ECB to open the QE tap.
• China joined Europe in providing the markets with grim economic data. Factory PMI in December came in weak and new concerns about real estate developers and their solvency have been raised this week.
• The latest iteration of the Fed’s minutes revealed that the FOMC was open to the notion of having to raise rates before headline inflation printed a 2% level. Futures pricing is expecting a September increase currently.
• President Obama moved to fill an open seat on the Federal Reserve’s Board of Governors by nominating Allan Landon, a community banker, for the post. The Senate also passed legislation that requires a member of the Board comes from the community banking industry going forward.
• Energy assets continued their stunning decline this week and do so at a rapid rate. Oil prices fell by over 5% this week. Natural gas has reached bottoms not seen in over two years, as a warm start to the winter has suppressed heating demand.
• The ECB is contemplating three different QE plans according to Reuters. At present, the most likely scenario is to utilize national central banks to buy their respective governments’ debt.

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