Top Stories Last Week
• Global Equity Markets Rose in a Volatile Week
Disappointed US job reports triggered speculation that the Fed may keep loose monetary policies longer. The Global stock markets recover all the losses suffered after the below-than-expected ISM manufacturing number was reported on Monday. Last week, S&P index rose 0.8%, and MSCI EAFE index rallied 2.4%. The MSCI Emerging Market was up 1.7%. Gold climbed 1.7%, and the SPGC commodity index rallied by 2.3%. The bond markets remained flat. Barclays US Treasury index was unchanged, while US high yield bonds rose by 0.7%.
• ISM Index Disappointed Investors
Markets got off to a very poor start to the week following the release of disappointing manufacturing data. Factories expanded in January at the weakest pace in eight months as colder-than-usual winter weather slowed demand and production, bringing a halt to recent momentum in U.S. manufacturing. The Institute for Supply Management’s (ISM) manufacturing index decreased to 51.3 from 56.5 the prior month.
• US Added 113K Jobs and Unemployment Rate Dropped to 6.6%
The Labor Department’s nonfarm payrolls report showed that employers added only 113K jobs in January, well below expectations. Investors appeared to focus on bad weather as an explanation, however, and stocks rallied as the week ended. A different government gauge of the labor market, known as the household survey, was more positive. The household survey showed a large increase in the number of Americans reporting that they had a job, helping bring down the unemployment rate to 6.6% in January—its lowest level since October 2008.
• Janet Yellen Became the First Woman to Lead the Fed
Janet Yellen was sworn in Monday to succeed Ben Bernanke, becoming the first woman to lead the Federal Reserve in its 100-year history. Yellen, 67, made no remarks at her swearing in but did smile to acknowledge the applause of the assembled group. Nominated by President Barack Obama on Oct. 9, her four-year term as chairman will end on Feb. 3, 2018. Meanwhile, the Brookings Institution, announced that Bernanke was joining the Washington think tank as a distinguished fellow in residence.
• ECB and BOE Kept Monetary Policies Unchanged
The European Central Bank’s president, Mario Draghi, is taking a wait-and-see approach as the threat of deflation hangs over the euro zone and the region’s unemployment remains stubbornly high. Despite mounting pressure to take action, the central bank on Thursday kept the benchmark interest rate unchanged for a third straight month, at a record low of 0.25 percent. Mr. Draghi said that the central bank needed more data before any additional moves to spur the economy could be justified, and that it would make a reassessment next month.
The Bank of England marked five continuous years of interest rates at their historic low of 0.5% on Thursday as it again decided to leave them unchanged. It is the 60th monthly meeting in succession that the Bank’s monetary policy committee (MPC) has set the rate at that level. The £375bn program of quantitative easing, which pumps money into the economy, was also held at the same level, with the UK’s GDP still below the level it was six years ago despite improving growth during 2013.
Top Stories to Watch This Week
• US Retail Sales
The retail sales in the US are likely to rise by 0.3% in January. US consumers continue to support the economic recovery.
• Euro Zone GDP Growth
The euro zone economy is expected to grow 0.2% in the fourth quarter and 0.4% from a year earlier.