Skip to main content
Market Update

Stock market gains mask weak economic end to 2020

January 4, 2021
  • Benjamin Clark headshot


    Ben Clark


    Corporates | Kennett Square, PA


While nations worldwide continue to distribute the COVID-19 vaccine, Americans have seen some progress in receiving their stimulus checks. The Treasury Department began depositing $600 checks in to Americans’ bank accounts last week, causing equity markets to rise.


Despite a tumultuous 2020, the S&P 500 finished the year up 16.26%. Rates markets, on the other hand, have not matched equity markets. Both the 10-year Treasury and the 30-year Treasury fell last week, reaching their lowest levels since mid-December. Lastly, on the final day of 2020, the United Kingdom completed Brexit by finishing the economic separation from the European Union.


Weekly initial jobless claims for the week ending December 26 came in at 787,000, slightly less than analyst expectations of approximately 830,000. While this number is only a fraction of the March peak of nearly 7 million initial jobless claims, it is still four times greater than pre-pandemic averages. Continually high initial jobless claims numbers highlight a trend of weak economic performance to close out 2020, as December consumer confidence dropped to a four-month low, while U.S. retail sales and consumer spending have also fallen recently.


The U.S. dollar continues to trend downward, driven by risk-on sentiment fueled by the distribution of the COVID-19 vaccine worldwide. EUR-USD traded as high as 1.22, its highest in over two years. GBP-USD has also reached its highest point since April 2018, hitting a weekly high of 1.36. The U.S. dollar weakened against every major currency last week and, as economies around the world continue to recover, many expect the dollar to continue weakening well into 2021. Along with other currency movements, the Chinese government is continuing its efforts to develop a Central bank Digital Currency. The Digital Currency Electronic Payment (DC/EP) is a digital version of the Chinese yuan. Recently the yuan has strengthened against the U.S. dollar, but has remained relatively steady against the EUR and GBP.

(Related insight: Read "Managing foreign currency risk: Why some companies hedge more than others")


Oil prices continued to trend upwards, reaching their highest levels since late February. WTI Crude finished 2020 at $48.42/bbl, nearing the $50 milestone. Supported by a weakening U.S. dollar and a strong inventory report, oil is set to drop approximately 20% in 2020, a much better result than what some had predicted in late Spring and early Summer. U.S. crude inventories fell by 4.8 million barrels last week, outperforming analyst expectations of a 2.6-million-barrel decrease.

(Related insight: Read: "Market volatility impacts fuel markets")

The week ahead

With President-elect Biden’s inauguration now only a couple of weeks away, all eyes will be on the market to begin the new year. On Wednesday, the Fed will release its December meeting minutes. Later in the week, initial jobless claims, nonfarm payroll, and unemployment numbers will be released. Analysts expect initial jobless claims to rise to 800k for the week ending January 2nd, while the unemployment rate is expected to increase to 6.8%.

About the author

  • Ben Clark


    Corporates | Kennett Square, PA


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit

Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.