Weekly Economic Update

Economic Update 10-19-2020

  • Economic data for the week included strength in retail sales and consumer sentiment, regional manufacturing reports were mixed, while industrial production fell back. Producer and consumer inflation ticked up slightly, while jobless claims remain challenged.
  • Flattish U.S. equity markets outperformed foreign stocks, which declined last week, along with mixed political and economic news. Bonds were also mixed, with slightly positive returns domestically, coupled by weakness abroad in keeping with a rising dollar. Commodities were similarly mixed, with agriculture and energy seeing gains.
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Weekly Economic Update

Economic Update 10-05-2020

  • Economic data for the week included the final GDP release for Q2, which was little changed. Manufacturing and construction continued to show general expansion trends, although month-to-month data remains mixed. Housing metrics and prices continue to show strength. The monthly employment situation report was positive, but not as strong as expected.
  • Global equity markets earned positive returns last week, with signs of continued economic improvement as well as ongoing hope for additional stimulus—despite resurgent and persistent Covid infection counts. U.S. bonds were mixed as rates ticked higher, while foreign bonds were helped by a weaker dollar. Commodities fell as crude oil prices continued to be challenged by difficult supply/demand dynamics.
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Weekly Economic Update

Economic Update 9-28-2020

  • Economic data for the week included a rise in durable goods orders and strong housing results, while jobless claims remained elevated.
  • Global equity markets lost ground globally by several percent, as economic concerns continued to fester in the wake of the pandemic. Bonds were mixed, with treasuries gaining a bit, while credit pulled back. Commodities lost ground across the board along with a stronger dollar and a less clear demand/supply picture.

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Weekly Economic Update

Economic Update 9-21-2020

  • Economic data for the week included the Federal Reserve keeping monetary policy unchanged, but with more dovish forward guidance. Retail sales and industrial production expanded, but at a slower pace than expected, as did the index of leading economic indicators. Housing results were mixed, although general consumer sentiment improved.
  • Global equity markets were mixed last week, with U.S. equities ending lower, while foreign stocks gained. Bonds were also mixed following the Fed meeting as underlying interest rates changed little. Commodities gained due to a sharp weekly increase in oil prices following tighter supplies, while natural gas experienced the opposite set of conditions.

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Fed Note

Fed Note:

The Federal Reserve Open Market Committee took no action at their mid-September policy meeting, as expected, leaving the fed funds rate at the zero bound of 0.00-0.25%.

Lately, the action seems to be happening between meetings. The Fed announced a new inflation targeting policy that will utilize an ‘averaging’ method based on recent inflation trends as opposed to the simpler meeting-by-meeting assessment. This will now allow for some drift in permitted inflation above target that would help ‘make up’ for periods of weakness during the pandemic. Presumably, inflation would end up being somewhat symmetrical over time around the 2.0% target, but the main concern is low current levels. The low rate regime also pressure the dollar lower, which has some economic benefits and tends to ease policy further if successful. The key question from economists is whether it will work to stoke inflation as intended.

Today’s formal statement changed quite dramatically in language, and materials noted the changes regarding its new inflation stance, showing interest rate forecasts on hold through 2023. The 2020 economic decline of -6.5% previously noted, was now raised to only -3%. There were two dissents in the meeting, about language and long-term intentions rather than current actions—seeking more flexibility about future policy decisions as inflation and growth conditions evolve, as opposed to appearing ‘boxed in’ with the newer policy of letting inflation run higher than target. Overall, the statement was seen as dovish.

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Weekly Economic Update

Economic Update 9-14-2020

 

  • On a holiday-shortened week, economic data included a tick upward in producer and consumer inflation, although levels remain tempered. Employment data remained mixed.
  • U.S. equity markets declined last week, as profit-taking in certain higher-growth stock groups continued. Foreign stocks outperformed domestic stocks slightly, along with improved economic prospects. Bonds gained due to inflows from riskier assets, led by investment-grade debt. Commodities were mixed to lower, as priced for crude oil and natural gas continued to show weakness.

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Weekly Economic Update

Economic Update 9-8-2020

 

  • Economic data last week included mixed but generally pointed to expansion for manufacturing and services releases, as well as a better-than-expected employment situation report for August.
  • U.S. and foreign equities both fell back last week, as growth stock strength reversed. Bonds ticked up slightly, although stronger economic data sustained interest rates. Commodities fell broadly, led by lower pricing for crude oil and demand continues to remain weak.

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Weekly Economic Update

Economic Update 8-31-2020

  • Economic data for the week included higher than expected durable goods orders, continued strength in house prices and new home sales, and largely stable elevated levels of jobless claims.
  • Global equity markets gained last week upon hopes of Covid therapeutics and a ramped-up vaccine timeline, as well as decent economic news. Bonds lost ground as outflows caused interest rates to tick higher. Commodities were mixed, despite spikes in natural gas prices due to hurricanes affecting the Gulf Coast.

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Weekly Economic Update

Economic Update 8-24-202

  • Economic data for the week included strength in a variety of housing metrics, continued improvement in a broad index of leading economic indicators, but a pullback in several regional manufacturing indexes.
  • U.S. equity markets gained upon continued stronger economic data and hopes for a near-term vaccine, while foreign stocks lost ground due to continued uncertainty over global trade relations and a virus uptick. Bonds fared well as interest rates ticked downward again. Commodities were mixed, with little change in oil prices, while natural gas prices again spiked.

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Weekly Economic Update

Economic Update 8-17-2020

 

  • Economic data for the week included further gains in retail sales, and industrial production, among other measures. Consumer sentiment and jobs results also showed improvement, all of which look to a stronger showing for the third quarter over the second.
  • Global equities experienced gains last week as investors look ahead to economic growth beyond Covid, especially as prospects for a vaccine improve (and Russia approving a vaccine). Bonds fell back, however, as interest rates crept up along with this same news. Commodities gained, with price increases for agriculture and natural gas, and less so for crude oil, which has been more stable as of late.

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Weekly Economic Update

Economic Update 8-10-2020

  • Economic data for the week included strength in ISM manufacturing and non-manufacturing surveys, a better-than-expected employment situation report for July, and a slight improvement in jobless claims.
  • Global equity markets inched higher last week with improved economic data and investor sentiment. Bonds were little changed, in keeping with minimal changes in the yield curve. Commodities gained with price increases for metals and natural gas.

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Weekly Economic Update

Economic Update 8-03-2020

  • Economic data for the week included the Federal Reserve keeping monetary policy unchanged and accommodative, GDP for the 2ndquarter came in showing historical weakness as expected, jobless claims remained elevated, while housing data showed signs of life with building activity picking up and prices steady due to tight market inventory.
  • U.S. equity markets gained, while foreign stocks experienced mixed results, as returns were largely sector-dependent. Bonds gained as interest rates ticked downward, especially outside of the U.S. as the dollar declined last week. Commodities were mixed, with energy down and metals higher.

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