Weekly Economic Update

Economic Update 10-15-2018

  • Economic data for the week featured more tempered inflation results than expected as seen in last month’s PPI and CPI, lowering the trailing year’s results.  Consumer sentiment declined and jobless claims ticked upward a bit due to hurricane-related effects.
  • Global equity markets suffered a volatile week, with the worst down day stretch seen in over six months.  Bonds fared positively, due to cash flows moving to less risky assets.  Commodities were mixed to down, as the price of crude oil declined sharply.

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Market Pullbacks

Market Pullbacks

It’s easy to get caught up in complacency when conditions are good, the sun is shining and the market is rising without interruption.  But, as we know intuitively (but often still forget), such parabolic conditions aren’t realistic or even desirable.  In theory, markets that moved upward without any risk of an occasional downward slide would eventually become prohibitively expensive as discounts would be wrung out of the system and create a market situation far more fragile than one with a healthy balance that reacts, digests/disregards and interprets news as it occurs.  Good or bad, this is the essence of how markets have operated over the course of the last few centuries. Continue reading

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Weekly Economic Update

Economic Update 10-08-2018

  • Economic data for the week was highlighted by a weather-suppressed but otherwise decent employment report, strong results from other labor metrics such as private employment and claims, and mixed manufacturing results.
  • Equity markets in both the U.S. and overseas experienced a negative week as interest rates ticked sharply higher.  As expected, fixed income was similarly affected across the board.  Commodities, however, ticked higher due to stronger agricultural and energy prices.

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Weekly Economic Update

Economic Update 10-01-2018

  • Economic data for the week was highlighted by the Federal Reserve raising rates by a quarter-percent as expected, final GDP data for the second quarter coming in unchanged yet strong, mixed results for housing, and decelerating but also strong industrial data.
  • Global equity markets lost ground for the week, with the U.S. outperforming foreign regions generally.  Bonds were little changed in keeping with a flattish yield curve, despite the Fed raising rates.  Commodities gained several percent due to the continued momentum of rising crude oil prices.

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Fed Note

Fed Note:

The FOMC decided to raise short-term interest rates by another quarter-percent—the third hike this year—bringing the fed funds target range to 2.00-2.25%.  This was largely as expected, with formal probabilities of such a move being pegged at around 95% based on futures markets.  There were no dissents.

The official statement noted a continued strengthening in economic and labor market activity, in addition to growth both household spending and business fixed investment.  Inflation was described as ‘near target’.  However, the term ‘accommodative’ was removed, in an acknowledgment of the evolution in policy.  The probability of a fourth hike in December by another quarter percent stands at about 75%, while 2019 probabilities are a bit less robust, with an anticipated 2-3 hikes.  However, that’s a lifetime away in the world of data-dependent Fed watching.  Based on assessments of current conditions most closely tracked by the Fed as part of its dual mandate, all are showing a green light:

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Weekly Economic Update

Economic Update 9-24-2018

  • Economic data last week showed continued signs of expansion, seen by a continued upward trend in an index of broad leading economic indicators, as well as stronger manufacturing and job markets; however, housing data continued mixed.
  • U.S. equity markets rose to hit new highs, but were surpassed by foreign stocks, helped by a weaker dollar.  Domestic bonds lost ground with higher interest rates, while emerging market debt fared better.  Commodities gained with currency impacts and higher oil and metals prices.

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Weekly Economic Update

Economic Update 9-17-2018

  • Economic news for the month included mediocre retail sales numbers, several inflation results that came in a bit lower than expected and continued strong labor market data.
  • Equity markets gained globally, as sentiment about trade improved somewhat.  Bonds were mixed with interest rates moving higher, as credit outperformed governments.  Commodities gained slightly, as oil prices moved higher.

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Weekly Economic Update

Economic Update 9-10-2018

  • Economic data for the week was dominated by a decent employment situation report for August, continued strong results in other labor metrics, as well as positive results from the ISM manufacturing and non-manufacturing surveys.
  • U.S. equity markets declined for the holiday-shortened week, as did foreign stocks with continued weakness in emerging markets.  Bonds fell also as interest rates ticked higher.  Commodities ticked downward along with lower crude oil prices.

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Weekly Economic Update

Economic Update 9-04-2018

  • Economic data for the week was led by an upwardly-revised GDP number, stronger consumer confidence and sentiment as well as continued low levels of jobless claims, while housing results were again mixed.
  • U.S. equity markets gained with improved sentiment for trade conditions, while foreign stocks were mixed.  Bonds lagged on the week as interest rates ticked higher.  Commodities were slightly higher as oil prices moved up again toward $70/barrel.

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Weekly Economic Update

Economic Update 8-27-2018

  • Economic data for the week consisted of continued strong showings for jobless claims, and mixed results for durable goods, while housing data was weak in terms of new and existing home sales.
  • Equity markets gained globally, with U.S. stocks reaching new records but still being outpaced by foreign stocks that were helped by a weaker U.S. dollar.  Bonds gained ground domestically with long-term interest rates falling, while foreign debt was also boosted by the dollar’s drop.  Commodities gained as crude oil prices rose back up toward $70/barrel upon Iranian supply concerns.

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Weekly Economic Update

Economic Update 8-20-2018

  • Economic data for the week was highlighted by stronger data for retail sales and leading economic indicators, mixed regional manufacturing survey results, while sentiment and housing data disappointed.
  • U.S. equity markets ticked higher last week, while foreign stocks suffered, and emerging markets faring worst.  Bonds were flattish as interest rates ended the week little changed.  Commodities lost ground, with crude oil prices losing a few dollars per barrel.

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Weekly Economic Update

Economic Update 8-13-2018

  • Economic data for the week was light but led by stronger inflation implied by the consumer price index, less so for producer prices, while labor markets continued their run of strength.
  • Equity markets lost ground overall during the week, with additional concerns over global trade and a currency crisis in Turkey.  U.S. bonds, on the other hand, earned positive returns with lower yields, while foreign bonds lagged with the headwind of a strong dollar.  Commodities were mixed, with oil prices declining somewhat, and offset by strength in metals and other segments.

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