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The U.S. Week Ahead (Jan 6-10): Jobs and Geopolitics in Focus


Senior Market Analyst at Interactive Brokers

Interactive Brokers’ senior market analyst Steven Levine provides a brief look at the U.S. economic calendar. The December employment situation highlights the economic calendar in the week ahead, as global financial markets grapple with heightened geopolitical tensions between the U.S., Iran and the broader Middle East.

Find out more in The U.S. Week Ahead (Jan 6-10): Jobs Set to Slow as Geopolitical Jitters Grow at IBKR Traders’ InsightSign up for our daily newsletter today!

Produced on January 6, 2020

Video Script:

The December jobs report is widely considered the highlight of the economic calendar this week, as global financial markets grapple with heightened geopolitical tensions between the U.S., Iran and the broader Middle East. Market participants generally expect a slowing of additional nonfarm payroll figures in the upcoming Bureau of Labor Statistics’ report Friday – this after returning auto workers – previously on strike – helped boost November’s numbers. Most of the jobs added in the past year have come from the health care sector, as well as from professional and technical services, while the participation rate has remained elevated, and the unemployment rate has remained at around a 50-year low.

In fact, the continued “strong” labor market was part of the reason the Fed decided in December to leave the target range on its federal funds rate at the 1.5 to 1 and three-quarter percent level. Against this backdrop, Jefferies economists Ward McCarthy and Thomas Simons recently said that with “more job openings than unemployed people, and the Census Bureau set to hire as many as 500,000 temporary workers in the first half of the year, 2020 will be another good year for the labor market.”

Meanwhile, investors will also likely be paying close attention to the ongoing threats of violence between the U.S. and Iran following the recent assassination of a top Iranian military commander, who was killed in a U.S. air strike at Baghdad airport. The incident, coupled with a downbeat ISM manufacturing report for December, has generally sent financial markets reeling, spurring prices of oil and gold higher, as well as the 10-year U.S. Treasury note, which jumped by around 8-9 basis points Friday.

Analysts at Janney Montgomery noted that the flight-to-safety trade was “alive and well,” following the exodus by investors out of U.S. Treasuries in December “on the combination of year-end portfolio repositioning and improved sentiment” towards risk assets and the economy for 2020 … However, since the start of the new year, yields on the 10-year note and 30-year bond have fallen by roughly 12-13 basis points.

As events unfold, the economic calendar in the week ahead will also include ADP’s employment report for December, as well as an update on crude oil stocks from the EIA on Wednesday, followed by initial jobless claims on Thursday, and then the employment situation report ahead of the weekend.

In the meantime, you can find more details on this topic in my full report, available now at IBKR Traders’ Insight – you can also select the Event Calendar option in the IBKR Trader Workstation for a full list of U.S. and global corporate events and earnings, dividend schedules, economic data, IPOs and more. I’m Steven Levine with Interactive Brokers asking you to enjoy the week ahead.

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Author Security Holding: No Positions

The author does not hold any positions in the financial instruments referenced in the materials provided.

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