Morning Minutes

US STOCKS TURN DOWNWARD AS LOCKDOWNS HIT ADP PAYROLLS

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US index futures have come under pressure this morning with NASDAQ futures falling 1.4% and S&P futures falling 0.3% while Dow futures are flat on the first significant signs that the latest round of lockdowns may be starting to negatively impact the economy. US ADP private sector payrolls declined in December for the first time since April (-123K vs street 88K and previous 304K). In Europe today monthly Service PMI reports are out with results coming in slightly below 50 in contraction territory and in several cases, below street expectations.

Investors also have a number of political developments in the US to digest this morning. It appears that control of the Senate may flip to the Democrats as well as the White House as they were declared winners in one of the two Georgia senate run-offs last night and at last report, were leading slightly in the other one. Today is also the day Congress is expected to confirm the Electoral College vote and Presidential Election result amid opposition and protests from some Republicans.

Meanwhile, commodities are up again this morning. WTI Crude Oil has regained $50.00/bbl for the first time since last February after OPEC+ agreed to hold production steady and Saudi Arabia announced a voluntary 1 mmbbl/d production cut for February and March, cementing its position as the world’s swing producer. Copper is also up today, climbing 1.2%.

The US 10-year treasury note yield has moved back up above 1.00% today for the first time since March, although its unclear if this rise in traded interest rates is being driven by confidence about the US economy, questions/perceived risks about what the Democrats may do with control of the House of Representatives, Senate and Presidency, or because the US Dollar has continued its downward trend into 2021. Defensive havens such as the Japanese Yen, Gold and Silver have backed off a bit today, suggesting that investor caution has not turned into fear at this point.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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