JM Bullion Weekly Market Review (1/6/17)


Market Overview: Gold and silver are both seeing some moderate selling pressure this morning following the release of the Employment Situation report for December. The metals have seen some strength in recent days, and both gold and silver could potentially be close to a longer-term bottom. Overall, risk appetite remains strong and economic as well as inflation expectations are on the rise. The FOMC meeting minutes on Wednesday seemingly portrayed a more hawkish Fed, although some language in the minutes have made that a subject of debate. All eyes will be on the incoming Presidential administration as it takes office later this month, and with expectations set very high at this point, investors will be looking for rapid signs of progress.

Key Data Points: In the biggest data point of the week, the U.S. reportedly added 156,000 jobs in December while the unemployment rate ticked slightly higher to 4.7 percent. Although the headline jobs number was below expectations of 175,000 jobs added, the big story of the report is the wage growth with a .4 percent rise in average hourly earnings. Wage growth is now closing in on levels that are considered to be inflationary.

The latest reading on Durable Goods Orders is also set for release today and is expected to show a reading of -2.5 percent.

Several Fed officials will also be speaking today at various engagements.

Outside Markets: Stocks have not shown much reaction to the jobs report in early action, and the broad-market S&P 500 is trading slightly higher.

The dollar index is moving higher following the jobs report, and it has already recouped much of the losses seen in trade yesterday. The dollar remains in a firm uptrend and is not far from recent highs.

After seeing the biggest upside in several months yesterday, treasuries are under some pressure today as yields rise. Overall, the sell-off in bonds has slowed recently, although rates may continue to move higher in the coming months. Just how much higher will likely depend on what actually gets done policy-wise once the new administration takes over.

The Big Picture: For now, risk appetite remains elevated and stocks are likely to stay near recent highs. Investors will, however, want to see progress made once the new administration takes over-and they will want to see things happening quickly. If the new administration is not able to deliver on some of the major economic policies that have been discussed in recent months, it could potentially drive risk aversion and could also change the Fed’s plans regarding interest rates.

All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.