Week in Review with Maureen Kelliher
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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 November 6 - 10, 2017

Last week’s most important economic release was the Producer Price Index, an inflation gauge. Increasing 2.4 percent year-over-year and excluding food and energy the gauge was slightly above expectations. Nonetheless, inflation in general remains subdued and thus currently does not present a threat to capital market valuations. Additionally, November’s University of Michigan Sentiment Survey was reported last week. Although consumer sentiment declined somewhat - from 100.7 in October to 97.8 in November - the present level still represents a 14-year high. As such, consumer confidence continues to reflect strength in the labor market and indicates the consumer feels secure in his or her job and job opportunities.

For the first time in eight weeks, stock markets both at home and abroad retreated last week. For the week overall, the S&P 500 Index sank -0.1 percent while the Dow Jones Industrial Index retreated -0.3 percent. The week’s best performing equity sector was real estate, which climbed 3.3 percent. The poorest performing sectors for the week were telecommunication and financials, which fell -1.3 percent and -2.6 percent, respectively. International stocks were mixed last week, as the MSCI EAFE Index declined -0.4 percent while emerging markets increased 0.2 percent. With the yield curve flattening to its lowest level in nearly a decade last week, bonds overall declined and high yield bonds suffered the most. For the week, the Barclays U.S. Aggregate Bond Index lost -0.4 percent, U.S. corporate bonds declined -0.7 percent and high yield bonds sank -0.8 percent. Some of the proposed tax law changes would likely limit the supply of tax-exempt bonds and thus only ten-year municipal bonds advanced last week.

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Week in Review

Securities and other investment products are:

Wealth Management Disclosure

 

Weekly Macro Updates

 

  • Initial Unemployment Claims (week of 11/4) 232k est., 239k actual, 229k prior
  • Continuing Claims (week of 10/28) 1885k est., 1901k actual, 1884k prior
  • JOLTS Job Openings (Sep) 6075 est., 6093 actual, 6090 prior
  • Consumer Credit (Sep) $17.500b est., $20.830b actual, $13.141b prior
  • Wholesale Trade Sales MoM (Sep) 0.9% est., 1.3% actual, 1.9% prior-R+
  • University of Michigan Sentiment (Nov) 100.8 est., 97.8 actual, 100.7 prior
  • U. of Michigan Current Conditions (Nov) 116.3 est., 113.6 actual, 116.5 prior
  • U. of Michigan Expectations (Nov) 91.0 est., 87.6 actual, 90.5 prior
  • U. of Mich 1 Yr Inflation Expectations (Nov) 2.6% actual, 2.4% prior
  • U. of Mich 5-10 Yr Inflation Expectations (Nov) 2.5% actual, 2.5% prior
  • Producer Price Index Final Demand YoY (Oct) 2.4% est., 2.8% actual, 2.6% prior
  • PPI Ex Food and Energy YoY (Oct) 2.2 % est., 2.4% actual, 2.2% prior
  • PPI Ex Food, Energy, Trade YoY (Oct) 2.3% actual, 2.1%prior
  • NFIB Small Business Optimism (Oct) 104.0 est., 103.8 actual, 103.0 prior
  • Strong or Improving
  • Inconclusive or lacking trend
  • Weak or declining

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