Oil fell to its lowest price since 2003 as a supply glut, weakening demand, and a global slowdown in growth makes the fossil fuel less in demand. WTI oil futures fell to near $30 per barrel in a volatile session in which the commodity ranged from $30.41 to $32.22, while rumors have begun that OPEC is planning an emergency meeting on how to manage the supply and price of oil in the face of a constant downward spiral.
Oil-related inflation expectations have also weakened, despite the Federal Reserve’s confident proclamation in December that inflation is likely to reach and eclipse its 2 percent target this year and beyond. The 10-year U.S. Treasury yield fell to 2.105 percent, roughly in the middle of its 52-week range but down significantly from the 2.2 percent average rate seen through most of December and early January. With expectations of a stronger U.S. economy driven by higher jobs growth, traders bet on greater inflation in the long term.
However, jobs data has been mixed since Fed Reserve Chairman Janet Yellen raised rates in December of last year and confidently asserted the strength of the U.S. economy and labor market. According to the Bureau of Labor Statistics, job openings and layover turnover (JOLTS) remained mostly unchanged at 5.4 million by the end of November, with hires and separations at 5.2 million and 4.9 million, respectively. The quits rate was at 2 percent and layoffs/discharges was at 1.2 percent.
Job openings remained mostly unchanged as well, at 5.4 million, with a 3.7 percent rate. Churn in job openings has disappointed analysts who look for more signs of aggressive hiring and firing in the market as a sign of greater strength in both the labor market and in employer confidence in greater demand throughout the economy.
Employer confidence does not show many signs of improvement, particularly when it comes to the small businesses that employ the bulk of Americans, particularly in the ever-growing service sector. According to the National Federation of Independent Business, small business owners are sending “mixed signals” about the economy and they are turning to the president’s final state of the union address for guidance. The NFIB’s Small Business Optimism Index rose 0.4 points to 95.2, leaving it “stuck in a ‘below average rut,” according to the NFIB.
NFIB Chief Economist Bill Dunkelberg said in a statement that a shift away from economic issues might mean President Obama says little to encourage business owners this year. "Small business owners will be listening to the President’s address tonight hoping to hear him talk about things that will grow the economy and help the little guys. The President appears to be shifting his attention away from the economy and toward foreign policy and guns so it’s no surprise that few small business owners expect the business climate to be better in the next six months,” Dunkelberg said.