What happened this week
All the major averages opened the year on a positive note last week, with the Dow and S&P posting their best week since November. The Dow on Friday soared more than 700 points, or 2.13%, after a positive December jobs report showed signs that inflation may be easing. Non-farm payrolls came in slightly higher than expected, but wages increased at a slower pace than expected, this coupled with data showing a contraction in the services sector, lead economists and investors to hope the central bank’s rate hikes are accomplishing their goal. Many market analysts have commented that the markets will have an increased focus on labor data for 2023, Wells Fargo analyst commenting, "The monthly jobs report will be the ‘new CPI.’ This year, labor data is “setting the tone for marginal swings (either hawkish or dovish) in Fed perceptions.”
The U.S. House of Representatives elected Kevin McCarthy of California as speaker in the 15th round of votes early Saturday. McCarthy had to make several concessions to win after the weeklong battle. McCarthy pledged a conservative, America-first agenda, tackling the immigration crisis at the Mexican border, cutting back funding at the IRS and fixing “woke indoctrination in our schools.”
On Sunday rioters ransacked Brazil’s three branches of power as part of a failed attempt to overthrow President Luiz Inácio Lula da Silva. Brazil’s security forces have regained control of the country’s political institutions and Brasilia governor Ibaneis Rocha said more than 400 people had been arrested. Lula made a surprising return to Brazil’s presidency late last year, securing 50.9% of the vote to defeat far-right incumbent Bolsonaro, many of Bolsonaro’s supporters refused to accept the result.
Looking ahead to the week:
Mon Jan 9th: NY Fed 1yr and 5 yr inflation expectations.
Thurs Jan 12th: CPI for Dec, Initial and Continuing Jobless Claims
Fri Jan 13th: Import Price Index
