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 August 6 - 10, 2018

The employment picture remains positive, with the most recent report showing unemployment claims close to a fifty year low, signaling that the unemployment rate may further decline. Although job openings continue to rise, hourly earnings releases were neutral. Bloomberg’s Consumer Comfort Index increased from the prior report, showing that consumer’s positive feelings towards their own finances offsets concerns about the macro environment. Producer Price (PPI) and Consumer Price (CPI) index releases both show inflation in the U.S. rising but not sharply. Tariffs are also starting to play a role in the growth of inflation. The Federal Reserve increased its 2018 and 2019 inflation outlook, signaling support for additional rate hikes this year and next.

Stocks ended the week mixed with the S&P 500 and Dow Jones indices down while the Russell 2000 Index was positive. International markets (both developed and developing) were also negative, continuing to show weaker performance than domestic markets as trade tensions weigh on sentiment. Only three equity sectors (Consumer Discretionary, Telecom and Technology) ended the week positive; the Consumer Staples and Real Estate sectors saw the biggest drop, both down close to 2.0%. The Technology and Consumer Discretionary sectors have had the strongest performance so far in 2018, up 16.8% and 15.1% respectively. Bond market returns were positive for the week. The Barclays U.S. Aggregate Bond Index was up 0.4%% for the week. U.S. corporate bonds returned 0.3% while municipals gained 0.2%. High yields were up slightly at 0.1%.

Week in Review

 

 

 

Securities and other investment products are:

Wealth Management Disclosure

 

Weekly Macro Updates

 

  • Initial Jobless Claims (Aug 4) 220k est., 213k actual, 219k prior: R+
  • Continuing Claims (Jul 28) 1730k est., 1755k actual, 1726k prior: R+
  • Real Average Hourly Earnings YoY (Jul) -0.2% actual, 0.0% prior
  • Jolts Job Opening (Jun) 6625 est., 6662 actual, 6659 prior: R+
  • Bloomberg Consumer Comfort (Aug 5) 59.3 actual, 58.6 prior
  • MBA Mortgage Applications (Aug 3) 3.0% actual, -2.6% prior
  • Consumer Credit (Jun) $15.500b est., $10.211b actual, $24.259k prior: R-
  • Wholesale Inventories MoM (Jun F) 0.0% est., 0.1% actual, 0.05 prior
  • PPI Final Demand YoY (Jul) 3.4% est., 3.3% actual, 3.4% prio
  • PPI Ex Food and Energy YoY (Jul) 2.8% est., 2.7% actual, 2.8% prior
  • CPI YoY (Jul) 2.9% est., 2.9% actual, 2.9% prior
  • CPI Ex Food and Energy YoY (Jul) 257.815 est., 257.930 actual, 257.305 prior
  • Strong or Improving
  • Inconclusive or lacking trend
  • Weak or declining

R+ Revised up
R- Revised down

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