The week that was:
Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it could take “four to five more years” for the labor market to completely mend. Payrolls increased 103,000, less than the median projection of 150,000 in a Bloomberg News survey, Labor Department figures showed yesterday in Washington. The jobless rate fell to 9.4 percent, partly reflecting a shrinking workforce as discouraged Americans stopped looking for work. Federal Reserve Chairman Ben S. Bernanke said the unemployment rate will probably fall slowly even with a pickup in U.S. growth this year, signaling no change in the central bank’s monetary stimulus.
Facebook Inc., one of the world's hottest technology companies, gave the clearest sign yet that it is preparing to take itself public sometime next year, as it revealed new details in a 100-page document sent to a select group of potential investors. Frenzied investor interest in the deal, offered solely to Goldman partners and handpicked clients of the securities firm, has put a stamp of approval on the $50 billion valuation of Facebook implied by its agreement with Goldman and Digital Sky Technologies for a $500 million infusion from the two companies. As a private company, Facebook isn't required to report its revenue, profits or losses, and executive compensation, as publicly traded companies must do. Crossing the threshold triggers the SEC's filing requirements, even if a company's shares don't trade publicly. Such companies must register as a reporting company within 120 days after the end of year in which the limit is breached. At that point, companies typically conclude that they might as well go public, listing their shares on an exchange and cashing in if the offering succeeds. Facebook's current fiscal year ends on Dec. 31, making its disclosure deadline the end of April 2012. The Securities and Exchange Commission has begun examining whether disclosure rules for privately held firms need to be rewritten as a result of recent deals allowing investors to buy shares in Internet companies such asFacebook Inc. and Twitter Inc., according to people familiar with the situation.
Stocks:
U.S. stocks advanced for the sixth straight week, the longest streak since April, as stronger-than- estimated employment and service sector data lifted confidence in the world’s largest economy.
The Standard & Poor’s 500 Index fell yesterday after a Labor Department report showed the nation added fewer jobs than forecast and two banks lost a foreclosure case. Bank of America Corp. and Hewlett-Packard Co. led gains in the Dow Jones Industrial Average, as the lender climbed 6.8 percent after settling loan disputes. Alcoa Inc. rallied 6.7 percent after Deutsche Bank AG raised the stock to a “buy” and Jim Cramer named it 2011’s “top stock.”
The S&P 500 climbed 1.1 percent to 1,271.50 in the five days ended Jan. 7, the biggest weekly gain in four weeks. The benchmark gauge for U.S. stocks jumped on Jan. 5 to 1,276.56, its highest close since Sept. 2, 2008. The Dow added 97.25 points, or 0.8 percent, to 11,674.76.
Bonds:
Treasury five-year notes had the first back-to-back weekly gains since October as U.S. payrolls grew less than forecast and Federal Reserve Chairman Ben S. Bernanke said the labor market’s recovery will be gradual. Yields on the notes touched the lowest level in two weeks yesterday after Labor Department data showed nonfarm payrolls expanded by 103,000 last month, versus a median forecast of 150,000 in a Bloomberg News survey. The Treasury will sell $66 billion in securities next week in the year’s first note and bond auctions.
Company bond sales in the U.S. reached a record this week and relative yields on investment- grade debt shrank to the narrowest since May as money managers boosted bets economic growth is gaining momentum. Issuance soared to $48.5 billion, eclipsing the $46.9 billion raised in the week ended May 8, 2009, as General Electric Co.’s finance unit sold $6 billion of notes in the largest offering in 11 months, according to data compiled by Bloomberg. Investment-grade bond spreads narrowed to 162 basis points, or 1.62 percentage points, more than Treasuries, Bank of America Merrill Lynch index data show.
Appetite for corporate debt is growing after annual sales topped $1 trillion for the second consecutive year as the securities return more than Treasuries. Service industries expanded at the fastest pace since May 2006, signaling the U.S. economy is poised to accelerate. While employers added fewer positions in December than forecast, the jobless rate has dropped to the lowest in 19 months.
End of week bond yields:
3 Month yield = 0.12%, up 2 bps from last week.
3 Year yield = 0.98%, down 1 bps from last week..
5 Year yield = 1.96%, down 4 bps from last week.
10 Year yield = 3.32%, up 4 bps from last week.
30 Year yield = 4.48%, up 15 bps from last week.
Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it could take “four to five more years” for the labor market to completely mend. Payrolls increased 103,000, less than the median projection of 150,000 in a Bloomberg News survey, Labor Department figures showed yesterday in Washington. The jobless rate fell to 9.4 percent, partly reflecting a shrinking workforce as discouraged Americans stopped looking for work. Federal Reserve Chairman Ben S. Bernanke said the unemployment rate will probably fall slowly even with a pickup in U.S. growth this year, signaling no change in the central bank’s monetary stimulus.
Facebook Inc., one of the world's hottest technology companies, gave the clearest sign yet that it is preparing to take itself public sometime next year, as it revealed new details in a 100-page document sent to a select group of potential investors. Frenzied investor interest in the deal, offered solely to Goldman partners and handpicked clients of the securities firm, has put a stamp of approval on the $50 billion valuation of Facebook implied by its agreement with Goldman and Digital Sky Technologies for a $500 million infusion from the two companies. As a private company, Facebook isn't required to report its revenue, profits or losses, and executive compensation, as publicly traded companies must do. Crossing the threshold triggers the SEC's filing requirements, even if a company's shares don't trade publicly. Such companies must register as a reporting company within 120 days after the end of year in which the limit is breached. At that point, companies typically conclude that they might as well go public, listing their shares on an exchange and cashing in if the offering succeeds. Facebook's current fiscal year ends on Dec. 31, making its disclosure deadline the end of April 2012. The Securities and Exchange Commission has begun examining whether disclosure rules for privately held firms need to be rewritten as a result of recent deals allowing investors to buy shares in Internet companies such asFacebook Inc. and Twitter Inc., according to people familiar with the situation.
Stocks:
U.S. stocks advanced for the sixth straight week, the longest streak since April, as stronger-than- estimated employment and service sector data lifted confidence in the world’s largest economy.
The Standard & Poor’s 500 Index fell yesterday after a Labor Department report showed the nation added fewer jobs than forecast and two banks lost a foreclosure case. Bank of America Corp. and Hewlett-Packard Co. led gains in the Dow Jones Industrial Average, as the lender climbed 6.8 percent after settling loan disputes. Alcoa Inc. rallied 6.7 percent after Deutsche Bank AG raised the stock to a “buy” and Jim Cramer named it 2011’s “top stock.”
The S&P 500 climbed 1.1 percent to 1,271.50 in the five days ended Jan. 7, the biggest weekly gain in four weeks. The benchmark gauge for U.S. stocks jumped on Jan. 5 to 1,276.56, its highest close since Sept. 2, 2008. The Dow added 97.25 points, or 0.8 percent, to 11,674.76.
Bonds:
Treasury five-year notes had the first back-to-back weekly gains since October as U.S. payrolls grew less than forecast and Federal Reserve Chairman Ben S. Bernanke said the labor market’s recovery will be gradual. Yields on the notes touched the lowest level in two weeks yesterday after Labor Department data showed nonfarm payrolls expanded by 103,000 last month, versus a median forecast of 150,000 in a Bloomberg News survey. The Treasury will sell $66 billion in securities next week in the year’s first note and bond auctions.
Company bond sales in the U.S. reached a record this week and relative yields on investment- grade debt shrank to the narrowest since May as money managers boosted bets economic growth is gaining momentum. Issuance soared to $48.5 billion, eclipsing the $46.9 billion raised in the week ended May 8, 2009, as General Electric Co.’s finance unit sold $6 billion of notes in the largest offering in 11 months, according to data compiled by Bloomberg. Investment-grade bond spreads narrowed to 162 basis points, or 1.62 percentage points, more than Treasuries, Bank of America Merrill Lynch index data show.
Appetite for corporate debt is growing after annual sales topped $1 trillion for the second consecutive year as the securities return more than Treasuries. Service industries expanded at the fastest pace since May 2006, signaling the U.S. economy is poised to accelerate. While employers added fewer positions in December than forecast, the jobless rate has dropped to the lowest in 19 months.
End of week bond yields:
3 Month yield = 0.12%, up 2 bps from last week.
3 Year yield = 0.98%, down 1 bps from last week..
5 Year yield = 1.96%, down 4 bps from last week.
10 Year yield = 3.32%, up 4 bps from last week.
30 Year yield = 4.48%, up 15 bps from last week.
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