LSA Connect

Economic Update 2-8-2016

• Economic data was highlighted by better-than-expected results in manufacturing and weakness in services—both the opposite of recent trends.  The Friday employment situation report was mixed, leaving investors wondering about possible effects on upcoming central bank policy.

• Global equity markets fell on the week, with uncertainties about economic growth and volatile oil prices.  Fixed income gained on the risk-off week, with lower interest rates.  Foreign assets were affective positively, at least for U.S. investors, from the largest one-week decline in the dollar in several years.

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Fed Note:

The January Fed meeting wasn’t expected to be one of any consequence, based on the widely anticipated interest rate move that was handled in December.  In their statement, the FOMC acknowledged a slowing of economic growth recently, global financial market volatility, and also pressures that are keeping inflation low, but also labor market improvement.  The overall tone of the report was a little more dovish than some expected, which may raise the bar for the next interest rate increase. Continue reading →

Economic Update 1-25-2016

• Last week’s economic data was mixed, with manufacturing not as bad as expected, continued low inflation driven by commodity price declines over the past year, and mixed housing results to end the year.

• A terrible start to the week in equity markets was turned around a bit by Friday, resulting in global stocks ending up positively for the week.  Bonds provided slightly negative returns as interest rates ticked back upward.  After an early drop below $30/barrel, oil prices moved sharply higher over that level toward week’s end.

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Economic Update 1-11-2016

• The first batch of economic data on the year was mixed, to a bit disappointing, with ISM manufacturing and non-manufacturing missing expectations, with industrial numbers generally continuing a pattern of recent weakness.  The employment report for December, however was quite good and surprised on the upside.
• Global equity markets experienced their worst start to a year in several decades, losing several percent as a result of concerns over China and energy.  Speaking of energy, crude oil dropped to multi-year lows as continued uncertainty surrounded markets.  Safe-haven bonds were the sole winning asset class on the week, as investors left risk assets.

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Economic Update 1-4-2016

• Economic numbers for the last week of the year was mixed, with more poor manufacturing data (which has been in a back-and-forth trend all year), housing prices moving higher while pending home sales fell.  Improvement in consumer confidence was a rare bright spot.
• Equity markets ended on a lackluster note, both for the week and the full year, with falling energy prices playing a key role in the poor results.  Bonds were flat with little changes in interest rates on the week, and on net for the year as well, despite some volatility in between.  Commodities lost ground generally with oil prices falling on the week, capping off a year of substantial price declines for a variety of energy contracts.

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Economic Update 12-28-2015

• For a short Holiday week, quite a few economic data points were released, including flattish durable goods orders, mixed housing results but improved consumer sentiment.
• Equity markets rallied during the week, with help from some improvement in energy prices.  Domestic bonds were down on interest rates ticking upward a bit, while commodity prices benefitted from oil inventory news and weakness in the dollar.

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Economic Update 12-21-2015

• The most significant piece of economic data for the week was the FOMC’s decision to raise the fed funds rate for the first time in a decade, as overall conditions appeared stable enough to policymakers to withstand such a policy shift.  In other news, several industrial indicators continued to show some weakness, inflation remained tempered and monthly housing stats came in stronger for the prior month.
• Equity markets began strongly in advance of the FOMC meeting, but gave up gains by week’s end.  Interest rates ticked slightly higher, which brought down bond returns during the week.  A trend of a strong dollar and low oil prices continued, which negatively affected commodity prices.

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