Week in Review with Maureen Kelliher
Maureen Kelliher

Each week, Investment Officer and resident economist Maureen Kelliher comments on investment trends and economic news which impact the financial markets.

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Capital Market Implications for the Week of April 16 - 20, 2018

Last week’s economic releases were generally positive, as the housing market did better than anticipated in March while initial reports of industrial activity in April were also ahead of forecast. Although the housing market is facing affordability issues (i.e., higher mortgage rates and home prices) and tight inventory, housing starts, building permits and new home sales managed to rebound in March from February’s weakness. Additionally, March’s existing home sales were better than expected. Flash purchasing manager’s indexes for April (both manufacturing and service PMI’s registered above 54) suggested the economy got off to a strong start in the second quarter after experiencing some softness in the first. Finally, Philadelphia’s Federal Reserve Business Outlook Survey ticked up in April.

Although rising interest rates weighed on markets late last week, positive corporate earnings announcements helped stocks to post a small gain. For the week, both the S&P 500 Index and the Dow Jones Industrial Average rose 0.5%. Once again, energy stocks were the week’s strongest performers having increased 2.6%; while consumer staples lagged (off -4.2%) as surprisingly poor sales at Phillip Morris punished the stock and sector. International markets were mixed, with the MSCI EAFE Index higher by 0.5% while emerging markets declined slightly. As the ten-year Treasury yield surged to nearly 3.0%, longer-dated bond prices fell hard last week. Consequently, it was a tough week in the bond pits, with the Barclays U.S. Aggregate Bond Index losing -0.6% and U.S. corporates down nearly 1.0%. For the week, ten-year municipal bonds and high yield bonds suffered the least, off -0.2% and -0.1%, respectively.

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Week in Review

Securities and other investment products are:

Wealth Management Disclosure

 

Weekly Macro Updates

 

  • Initial Jobless Claims (Apr 14) 230k est., 232k actual, 233k prior
  • Continuing Claims (Apr 7) 1845k est., 1863k actual, 1878k prior
  • Housing Starts (Mar) 2.5% est., 1.9% actual, -3.3% prior: R+
  • Building Permits MoM (Mar) 0.0% est., 2.5% actual, -4.1% prior: R+
  • Existing Home Sales MoM (Mar) 0.2% est., 1.1% actual, 3.0% prior
  • New Home Sales MoM (Mar) 1.9% est., 4.0% actual, 3.6% prior: R+
  • FHFA House Price Index MoM (Feb) 0.6% est., 0.6% actual, 0.9% prior: R+
  • S&P CoreLogic CS 20-City YoY (Feb) 6.3% est., 6.8% actual, 6.4% prior: R+
  • Industrial Production MoM (Mar) 0.3% est., 0.5% actual, 1.0% prior
  • Philadelphia Fed Reserve Bus Outlook (Apr) 21.0 est., 23.2 actual, 22.3 prior
  • Chicago Fed Reserve Natl Activity Index (Mar) 0.28 est., 0.10 actual, 0.98 prior: R+
  • Leading Economic Indicator Index (Mar) 0.3% est., 0.3% actual, 0.7% prior: R+
  • Markit U.S. Manuf Purchas Mgrs Index (Apr P) 55.2 est., 56.5 actual, 55.6 prior
  • Markit U.S. Services PMI (Apr P) 54.1 est., 54.4 actual, 54.0 prior
  • Strong or Improving
  • Inconclusive or lacking trend
  • Weak or declining

R+ Revised up
R- Revised down

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