Weekly Macro Minute

William Harbison authored this issue’s devotional. He served the Lord for 50 years.

Goodness and mercy – I call them God’s “Twins of Grace.” We find them in David’s Psalm 23:6 (NKJV):

Surely goodness and mercy shall follow me all the days of my life;

And I will dwell in the house of the Lord forever.

David says they follow him all the days of his life, leading David to the house of the Lord to abide forever.

At the age of 91, I, too, find them following me every step of the way. They were there when my high school sweetheart and I, as newlyweds, were baptized together in 1952. They were there when the Lord summoned me into the ministry soon thereafter and when we began a ministry together that lasted six decades in seven different Southern Baptist churches.

The Twins of Grace were there when the Lord blessed our home with three sons and three daughters, all of whom made their “profession of faith” and were baptized into a Southern Baptist church, where they still worship and serve.

However, all has not always been joyful. Our first grandson, at the age of 22, died in his sleep from a heart defect. The Twins of Grace, goodness and mercy were there then, too, to comfort. A couple of years later, one of our sons (a mountain climber by his passion) took a fall from which he never recovered. There they were again; the Twins of Grace were ministering to us.

My beloved companion of 60 years, whom I miss dearly, completed her journey a decade ago. Goodness and mercy are still by my side, giving me comfort beyond compare.

As the years unfolded, relative after relative, church member after church member, and acquaintance after acquaintance have left me on their upward journey, leaving me here walking somewhat more slowly now, with goodness and mercy trailing along after me. I trust they are trailing along after you as well.

When was the last time you encountered the Twins of Grace?

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Across the Markets

U.S. equities declined in a shortened trading week due to Thursday’s market closure in honor of former President Jimmy Carter. Economic data released last week underscored the economy’s continued strength and persistent inflationary pressures. Small-cap stocks underperformed large-caps for the fifth time in six weeks, with the Russell 2000® Index falling 3.5% while the S&P 500® fell 1.9%.

U.S. Treasury yields climbed, and the yield curve steepened over the week, driven by a surge in yields after Friday’s stronger-than-expected jobs report. The 2-year yield rose 10 basis points week-over-week, closing at 4.38%, reflecting market expectations for fewer rate cuts this year. Meanwhile, the 10-year yield briefly hit its highest intraday level since November 2023 at 4.79% before closing Friday at 4.77%, up 17 basis points on the week.

Expectations for the European Central Bank to cut interest rates in January help support the equity markets in the region. U.K. government debt yields surged to multi-decade highs due to concerns over increased borrowing and economic weakness.

In Japan, equity markets fell week-over-week as the yen weakened amid uncertainty about the timing of the Bank of Japan’s next rate hike and the widening U.S.-Japan interest rate differential. Chinese equity markets declined over the week as recent economic data reignited fears that China’s economy remains mired in a deflationary spiral.

In the Economy

The ISM Services Purchasing Managers Index (PMI) beat expectations, rising two points from November’s reading to 54.1, indicating a stronger service sector expansion. While new orders and employment components were steady primarily, business activity increased. Notably, the prices paid index jumped to 64.4, the highest since early 2023. This rise in costs, combined with tariff uncertainties, has amplified concerns about inflation’s trajectory.

November job openings climbed to 8.1 million, surpassing economist estimates and marking a six-month high. Despite job openings rising, the quits rate dropped to 1.9%. A lower quits rate is viewed as a signal that workers are not confident about landing a new job.

December’s jobs report exceeded expectations with 256,000 new hires, the highest since March. The unemployment rate dropped to 4.1%, while annual wage growth slowed to 3.9%. Overall, the strong December jobs report, coupled with uncertainty about the inflationary impact of the new administration policies, has prompted several Federal Reserve officials over the past week to signal that further interest rate cuts are likely on hold until economic data justifies additional easing.