Economic slowing, at least at first, has usually been associated with slowing productivity as the labor force produces less. But not this time. Despite a drop in output, fourth-quarter productivity proved strong and is raising talk that firms have slashed their workforces with unusual speed. The day's jobless claims data show acute contraction in the labor market and point, as do a host of other indications, to another month of severe losses in tomorrow's jobs report.
Talk in Washington is building that the new administration will roll back mark-to-market accounting rules that have forced banks to value assets at their current value. The talk gave a boost to bank shares and reversed early losses in the stock market. The Dow industrials rose 1.3 percent to end back over 8,000 at 8,063.
Other economic data included another run of very weak chain store reports, reports that point to another very weak retail sales report. The weak economic data pulled money into the Treasury market despite the gain in stocks. Yields were down 1 to 2 basis points across the curve with the 2-year ending at 0.97 percent and the 30-year at 3.64 percent. The dollar firmed slightly to end at $1.2814 against the euro. Oil remains steady, holding just over $40 while gold moved further over $900, ending at $917.80.