Weekly Fundamental Bulletin: ECB Minutes & US Retail Sales

Last week’s highlights

US manufacturing rises

Manufacturing activity in the United States rose to a two and half year high in December.

Official data from the ISM institute showed that the manufacturing gauge rose to 60.7 during the month. It comes on top of November’s increase to 57.5, making the December data the highest since August 2018.

The increase came on a rebound on supplier deliveries which rose from 61.7 in November to 67.6 in December. New orders sub-index rose to 67.9 in December, up from 65.1 previously.

German factory orders rebound in November

Factory orders from Germany posted an unexpected rebound in November.

Demand rose by 2.3% in November compared to estimates of a 0.5% decline. The factory orders were more than 6% above the pre-crisis level, according to official data.

The increase marks a 7th consecutive increase in factory orders. The data comes as Germany extended its lockdown restrictions through the end of January.

Investors brush aside FOMC meeting minutes

The US Federal Reserve released its meeting minutes from the December monetary policy meeting.

There was nothing new for the markets which broadly dismissed the minutes. However, the minutes showed that the new forward guidance was qualitative, which undermines the current scenario of chasing the inflation target and unemployment rate.

The minutes also showed that policymakers discussed the tapering process. But, given the 2013 – 2014 taper tantrum, no further details were discussed at the meeting.

The minutes underlined the fact that the Fed is likely to maintain the status quo.

Payrolls post the first decline since April 2020

The monthly US nonfarm payrolls report released on Friday saw the labor market losing jobs for the first time in 8 months.

The data reflects the drop in hiring in the hospitality sector amid renewed restrictions.

Nonfarm payrolls fell by 140,000 from the previous month, according to official data. The unemployment rate, however, bucked the trend, holding steady at 6.7%.

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