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Daily Commentary
Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.
Wednesday, December 4, 2024 at 8:00 am CT
Commentary prepared by Tom Slefinger, Market Strategist
Market Indications
Other Market Indicators
| Market Indicators | ||
|---|---|---|
| 2s/5s Tsy Spread | -0.11 | -0.01 |
| 2s/10s Tsy Spread | 0.01 | -0.02 |
| 2s/30s Tsy Spread | 0.19 | 0.00 |
| DJIA-30 | 44,782.00 | -128.65 |
| S&P-500 | 6,047.15 | +14.77 |
| NASDAQ | 19,403.95 | +185.78 |
| Dollar Idx | 106.38 | +0.86 |
| CRB Idx | 286.94 | +0.22 |
| Gold | 2,660.00 | +21.2 |
Daily Commentary
Recap – Good Wednesday morning! The beat goes on with the S&P notching its fifty fifth record high for the year. Yesterday the broad index closed a hair over 0% to notch a new record of 6,049.88. The Nasdaq also rose 0.4%, a new record of its own. Equity market sentiment is clearly off the charts. U.S. futures are squarely in the green (and gaining momentum by the minute) to fresh record highs and on no new news.
The mini-bond rally has ended, with yields drifting higher with the 10-year Treasury benchmark at 4.25%.
The just-released Organization for Economic Cooperation and Development (OECD) forecast boosted its U.S. 2025 real gross domestic product (GDP) growth outlook to +2.4% in 2025 from its prior call of +1.6%. The group seems to be buying into the view that none of President-elect Donald Trump’s most damaging policies will ever see the light of day, but that all of his pro-growth pledges will make it through a fractious Congress with a razor-thin majority in the House.
Meanwhile, even before Trump has taken office, the U.S.-China trade war has moved to a new chapter, with Beijing retaliating against new export controls announced by Washington by banning shipments of several minerals and metals crucial in semiconductor manufacturing and military applications. It must be said that the tit-for-tat tariff war that Donald Trump started in 2018 never did end and was extended by the Biden tenure, to the point where the average effective tariff rate imposed on China has soared from 3% back then to 11% today.
The Job Openings and Labor Turnover (JOLTS) data for October showed a surprisingly strong rebound in job openings – soaring by a whopping 372,000, the biggest monthly increase since August 2023, to 7.744 million from 7.372 million. Even so, the +372,000 surge in October failed to offset the -489,000 plunge in September and openings are still down -10.8%, or by -941,000, over the past year.
While the job openings surge was a surprising reversal, the number of hires tumbled -269,000 in October from 5.582 million to 5.313 million, a new post-covid low. U.S. hires, as percent of employment, has dropped to 3.3%, THE LOWEST since the 2020 Pandemic CRISIS. The hiring rate is now below the 2015-2019 pre-pandemic average of 3.8% and below the 2001 recession levels. Hiring has been falling for three years. I should also point out that all geographical regions were down, so this was not just a hurricane story. The hiring rate at 3.3% (down from 3.5%) is now tied for the lowest reading since April 2020 as well.
While hirings are on their way down, the number of firings remains at rock bottom levels as companies continue to hoard labor. Layoffs plunged -169,000 in the sharpest fall off since April 2023 to a four-month low of 1.633 million.
Here’s the key takeaway from the JOLTS report. While firings may be down -20,000, hirings are down a multiple of that at -501,000 (and openings down a whopping -941,000). The three in tandem reveal a labor market that is visibly cooling off.
Finally, no matter what the "data" shows, let's not forget that it is all just estimated, and it is safe to say that the real number of job openings remains still far lower since half of it – or some 70% to be specific – is guesswork. As the Bureau of Labor Statistics (BLS) itself admits, while the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate remains near a record low 33%.
The next piece of the jobs puzzle will be the release ADP private payroll report which is expected to show a reading of 165,000 additional jobs which would be lower than October’s increase of 233,000.
Be sure to be at your desk at 1:40 pm (ET) today as Federal Reserve Chair Jerome Powell will be participating in a “moderated discussion” at the New York Times Deal Book Summit in New York. This is the last time we will be hearing from the Fed Chair until the December 17-18 Federal Open Market Committee (FOMC) meeting and it very likely will be a market mover heading into the close.
Have a great day!
Economic Calendar
December 2- 6, 2024: The Week Ahead
Future Fed Expectations
Source: Bloomberg
as of 11/18/2025
| Select Probabilities based on the Futures | |
|---|---|
| Probability of Fed Funds rate CUT on December 18, 2024 | -62% |
| Probability of Fed Funds rate CUT on January 29, 2025 | -21% |
**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.
The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Alloya Investment Services to discuss your specific situation and objectives.