Succinct Summation of the Week's Events

Succinct Summation of the Week's Events:

Positives,

1)The December PCE both headline and core rose .2% m/o/m as expected with headline up 2.6% y/o/y and 2.9% for the core.

2)Q4 GDP was up 3.3%, well better than the estimate of 2% with about half the difference being a weaker than expected price deflator, though PCE was as expected. Personal consumption and government spending led the way. 

3)Personal spending in December was up .7% m/o/m, two tenths more than expected and November was revised up by 2 tenths. Income was higher by .3% as forecasted m/o/m.

4)Core durable goods orders for December were a touch above the estimate while shipments, included in the above GDP data, was about in line.

5)The January S&P Global manufacturing and services PMI rose back to the flat line at 50.3 from 47.9 and services were up by 1.5 pts m/o/m to 52.9. With new orders, "Service providers reported the strongest gain for 7 months. More robust demand conditions were linked to greater client referrals and emerging reports of customers having worked through their buffer stocks." New orders rose too for manufacturing but delivery delays were cited "following severe storms and shipping disruptions at times hampered production." On pricing, "The pace of manufacturing input cost inflation picked up to the steepest since April 2023 amid challenges sourcing materials, higher prices for transportation and increased fuel costs." On the other hand in the service sector, "service providers signaled the slowest rise in output charges in the current sequence of inflation which began in June 2020 amid efforts to price competitively and drive new orders." Employment was down slightly from December and "The increase in staffing numbers was only marginal overall and the 2nd softest since last August."

6)The Federal Reserve finally wised up to how banks were gaming its Bank Term Funding Program and now no more ahead of its eventual extinction (hopefully) in March as they raised the bank borrowing rate to where the interest rate paid on excess reserves stands, 5.4%.