Outside Markets
Initial jobless claims in the US fell for the third week in a row, dropping by 9k to 211,000 during the final week of 2024. This was the lowest weekly jobless claims total in eight months, reflecting a tight US labor market.
The average US 30-year mortgage interest rate rose to 6.97% last week according to the Mortgage Bankers Association. This was the highest 30-year mortgage interest rate since July.
Equities: Wall Street closed out a memorable year on a quietly lower note Tuesday. The stock market posted some modest declines before breaking early for New Year’s Eve and a day off on Wednesday. Nasdaq fell more than 140 points while the Dow Jones and S&P 500 were slightly lower. The dips didn’t prevent 2024 from being a solid year for stocks.
The Dow Jones ended the year up 13% while Nasdaq finished 29% over 2023 thanks to a boom in AI-related tech stocks. The S&P 500 was 23% higher in 2024, adding up to a 54% increase over two years. Investors begin 2025 looking ahead to a new presidential administration presumed to be friendly to big business but new policies could stir up inflation and worsen relations with China and other major trading partners.
Dollar: The dollar continued its strong performance on Tuesday as doubts increased that the Federal Reserve would reduce interest rates at the end of January. The Dollar Index reached another 12-month high of 108.3, well above the moving average of 106.9. The dollar continued to pressure the euro lower, hitting 1.036.
The dollar was back on an upward track versus the yen, rising to nearly 157.3 late in the day. Analysts said intervention by the Bank of Japan remained a near-term possibility, but getting the yen back on its feet will depend on the Federal Reserve lowering interest rates and the Bank of Japan raising its rates.
Treasuries: Treasury yields were mixed in choppy trading on Tuesday. The 10-year yield rebounded to 4.57% after a steady decline the day before; the yield at the beginning of 2024 was 3.90%. The 2-year fell to 4.24% after trading above 4.33% on Monday.
Analysts said stubborn inflation has stymied the Fed’s strategy of ratcheting interest rates lower. Housing costs were a consistent contributor to inflation in 2024. Standard & Poor’s reported Tuesday that its Case-Shiller Index of housing prices was up 4.2% in October over 2023, ahead of expectations of a 4.1% gain.
Energies: An increase in China’s manufacturing activity helped push crude futures a dollar or so higher on Tuesday. February WTI added more than 80 cents and was briefly above $72 for the first time in a month on the improved chance of higher oil demand in China. Brent crude moved closer to $75.
February natural gas futures fell to $3.65, giving up most, but not all, of Monday’s weather-related surge. Profit taking were likely reason behind the gas selloff, but strong demand for LNG export contributed to prices remaining above the moving average of $3.21.
Metals: Gold futures posted modest gains on Tuesday while silver and copper were softer. February gold neared $2,640 but remained generally within Monday’s trading range. The continuing strong dollar and fading hopes for a January rate cut have offset some of the political uncertainty around the world.
China’s vow to improve its economy in 2025 apparently didn’t impress copper traders as February futures slipped to a 6-month low a few cents below $4.00 and sank further below the moving average. March silver closed below $30 for the second day in a row on light trading.
Livestock: Buying interest returned to the cattle market on Tuesday and pushed live and feeder cattle futures more than a dollar higher. While cash markets remained quiet on New Year’s Eve, February live cattle futures rose well above $191 and within shouting distance of the mid-December highs above $193.
March feeder cattle were nearly $2 higher and trading around $263 late in the day. The downturn in the hog market continued amid a technically driven selloff by the managed-money funds that could continue when trading resumes on Thursday.
February hogs fell to $80 during the session but were back above $81 at the end of the day. Meanwhile, leaders of the meat industry are urging exporters to route more shipments through the West Coast as a longshoremen’s strike on the Atlantic and Gulf Coasts looms in mid-January.
Live Cattle: The slaughter reached 225,000 on Tuesday compared to 156,000 the previous week. Sellers in the cash market reportedly were seeking $195 but analysts weren’t expecting any serious consideration until the end of the week. The CME Boxed Beef Index began the week above $312 while the Tuesday choice cutout was modestly below $325 on a light load count.
Feeder Cattle: Corn futures were higher again on Tuesday and pushing $4.60 late in the day. A cold wave in the Plains was expected to linger through the first weekend of 2025 with rain and snow possible into the Mississippi Valley. The CME Index was sharply higher at $261 to begin the week.
Lean Hogs: The slaughter reached 892,000 on Tuesday, well over the 661,000 total from the same time during Christmas week. Like the cattle cash market, hog sales were very light to begin the week with prices a bit below $80. The cutout fell below $92 early Tuesday with the 5-day average at $94.32.