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Weekly Macro Updates

Initial Jobless Claims (Jul 27) 214k est., 215k actual, 207k prior
Continuing Claims (Jul 20) 1674k est., 1699k actual, 1677k prior
PCE Core Deflator YoY (Jun) 1.7% est., 1.6% actual, 1.5% prior: R-
ISM Manufacturing Index (Jul) 52.0 est., 51.2 actual, 51.7 prior
ISM Non-Manufacturing Index (Jul) 55.5 est., 53.7 actual, 55.1 prior
Personal Income (Jun) 0.4% est., 0.4% actual, 0.4% prior: R-
Real Personal Spending (Jun) 0.2% est., 0.2% actual, 0.3% prior: R-
S&P CoreLogic CS 20-City YoY (May) 2.40% est., 2.39% actual, 2.53% prior
Pending Home Sales YoY (Jun) 0.7% est., -0.6% actual, -0.8% prior
Conference Board Consumer Confidence (Jul) 125.0 est., 135.7 actual, 124.3 prior
ADP Employment Change (Jul) 150K est., 156k actual, 112k prior: R+
Change in Nonfarm Payrolls (Jul) 165k est., 164k actual, 193k prior: R-
Unemployment Rate (Jul) 3.6% est., 3.7% actual, 3.7% prior
Average Hourly Earnings (Jul) 3.1% est., 3.2% actual, 3.1% prior 

Strong or Improving
Inconclusive or lacking trend
Weak or declining
R+ Revised up
R- Revised down

Directional change based on general
long-term tends.
Capital Market Implications

Last week was action packed with the Federal Reserve (as expected) reducing short-term interest rates by a quarter-percentage point on Wednesday and then Thursday President Trump unexpectedly escalated the trade war with China.  Additionally, there were a number of important economic indicators last week including July’s jobs report.  Although the pace of monthly job gains has slowed, the labor market remains strong with weekly jobless claims at a multi-decade low and the unemployment rate at 3.7%.  Personal income and spending continued to improve in June along with wage gains that climbed 3.2% over the last year.  The US consumer therefore is in good shape.  The weak spot of the economy however remains manufacturing as both the Markit and ISM manufacturing indexes for July hit their lowest levels since 2016.

President Trump’s threat to impose additional tariffs on China sent a shockwave through the stock market last week.  Investors sold stocks Thursday and right through Friday’s close making last week the worst week of the year for stocks.  For the five-day sessions, the S&P 500 Index plunged -3.0% and the Dow Jones Industrial Average sank -2.8%.  Only the real estate and utility sectors were up on the week, while technology and consumer retail stocks were the hardest hit, down more than -4.0%.  The action abroad was similar, as international developed markets slumped -2.6% while emerging markets fell -4.2%.  Bonds on the other hand were beneficiaries of not only the Federal Reserve’s interest rate cut last week but also the carnage in the stock market.  Thus for the week, the Barclays aggregate bond index and corporate bonds surged 1.0% while 10-year municipal bonds gained 0.6%.  Only high yield bonds declined last week, off -0.3%.