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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Weekly Economic Update

Economic Update 8-06-2018

  • Economic news during the week was highlighted by the Fed’s decision to keep interest rates steady, a lukewarm employment situation report for July but stronger labor data in other reports, decent housing numbers, but weaker ISM manufacturing and non-manufacturing numbers held back by tariff concerns.
  • U.S. stocks gained ground on the week, and offset losses in foreign stocks as the dollar strengthened.  U.S. bonds were little changed, but outperformed international bond markets due to the same dollar effect.  Commodities fell a bit, with most segments losing ground, including oil.

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Fed Update

Fed Update:

 

The FOMC concluded their monetary policy meeting today, which, as expected, resulted in no change to the fed funds rate—currently targeted to a range of 1.75-2.00%.  There were no dissenting votes.

The formal narrative again was positive in its assessment of overall conditions, with both economic activity and labor market descriptions being upgraded from ‘solid’ to ‘strong’.  As we’ve noted before, the FOMC statements have taken a decidedly more direct and business-like tone with Jerome Powell as chair, as opposed to the longer and more detailed releases under the Janet Yellen regime.  The movement away from the quantitative easing program, and various nuances with ‘tapering’, has also helped.  The periodic Q&A sessions (next scheduled for September) have been similarly more direct and in more straightforward language, which is not surprising considering the more diverse background of the current Fed chair compared the previous few, who originated from academia prior their tenures in the Federal Reserve system.

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