1. China's economy continues to show improvement that has any thoughts of a hard-landing receding into the background. Last night it was reported that China's HSBC services sector PMI rose to 54.0 in January from 51.7 in December. Readings above 50 show expansion. The composite HSBC PMI, covering both manufacturing and the service sector rose to 53.5 in January from 51.8 in December.
2. In Europe, the euro-zone's service sector PMI ticked up to 48.6 in January from 48.3 in December, but remains below the 50 level that indicates recessionary contraction.
3. But outside of the euro-zone in Europe, the United Kingdom's service sector PMI jumped to 51.5 in January from December's 48.9 level.
4. CoreLogic reports that U.S. home prices were up 0.4% in December, extending the year-on-year gain to 8.3%. (CoreLogic's home price data is not to be confused with other home price tracking services such as the Case-Shiller Home Price Index. They sometimes vary some).
As a side note it's interesting that at least in Florida, new home construction prices are rising faster than existing home prices. The factors include sharply rising lumber prices, and a serious shortage of low-cost labor as many experienced immigrant workers, both documented and illegal, returned to their native countries when the U.S. housing construction market collapsed.
5. Is the correction in U.S. Treasury bonds now spreading to previously red-hot high-yield bonds? Michael Kahn has this interesting chart in an article this morning, with this comment.
"The SPDR Barclay's High Yield Bond etf, symbol JNK, hit its highest level on Jan 25 since just before it collapsed in September 2008."
6. The market followed its historic pattern of the monthly jobs report creating a triple-digit move by the Dow in one direction or the other, with its 149 point rally on Friday. And with its 129 point decline yesterday, it followed the second half of that pattern, which is that the triple-digit move is usually reversed in the subsequent few days and the market returns to whatever was its focus prior to the jobs report.
Meanwhile, with the moving averages themselves rising so fast, the pause of the last several days has partially alleviated the overbought condition above 21-day and 50-day moving averages. But not enough to eliminate the condition for sure.