Daily Brief for January 7, 2022

Daily commentary for market and investment insights

What Happened in the Markets?

U.S. stocks dropped, and Treasury yields rose after the monthly jobs report, ending a volatile week to start the new year.

The U.S. created 199,000 new jobs in December, but this number was lower than expected and signals that ongoing labor shortages and another major coronavirus outbreak are holding back the economy.

According to data released on Friday by the Labor Department, the U.S. unemployment rate fell to 3.9 percent in December from 4.2 percent in November.

Source: Bloomberg, Harding Loevner

Investors glance at the labor rates to see if it is consistent with the Fed’s plans and whether wages rise, suggesting more inflation. The data supports the argument of hawks that the Fed needs to tighten policy because the labor market is still doing well.

The technology sector has been multiplying in recent years, thanks in part to low-interest rates. These rates have helped boost the present value of companies’ prospective earnings.

While the major equity indices are down this week, professional speculators have been selling stocks intensely.

Option trading volume is similar to stock trading volume because investors know options’ benefits in terms of safety and speculation. The relationship between stock and options movement is prominent.

The markets will be unstable until volatility falls and rolls back into long-gamma states.

Source: vixcentral

Disclosure: This article expresses my own views, and I wrote the article by myself. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article.

Sources: FT.com, Bloomberg, MarketWatch, WSJ.com

Important Information

The investment information, comments and recommendations contained herein are not subject to investment advice. The comments and recommendations contained herein are based on personal views. These views may not fit your financial situation and your risk and return preferences. For this reason, based only on the information contained herein, investment decisions may not have the appropriate outcome.