Week of August 5 - 9, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

August 14, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Aug 3) 215k est., 209k actual, 217k prior
Continuing Claims (Jul 27) 1690k est., 1684k actual, 1699k prior
JOLTS Job Openings (Jun) 7326 est., 7348 actual, 7384 prior: R+
Consumer Credit (Jun) $16.100b est., $14.596 actual, $17.793 prior: R+
Wholesale Trade Sales MoM (Jun) 0.2% est., -0.3% actual, -0.6% prior: R-
PPI MoM (Jul) 0.2% est., 0.2% actual, 0.1% prior
PPI Ex Food & Energy MoM (Jul) 0.1% est., -0.1% actual, 0.3% prior
PPI YoY (Jul) 1.7% est., 1.7% actual, 1.7% prior
PPI Ex. Food & Energy YoY (Jul) 2.3% est., 2.1% actual, 2.3% prior
CPI MoM (Jul) 0.3% est., 0.3% actual, 0.1% prior
CPI Ex Food & Energy MoM (Jul) 0.2% est., 0.3% actual, 0.3% prior
CPI YoY (Jul) 1.7% est., 1.8% actual, 1.6% prior
CPI Ex. Food & Energy YoY (Jul) 2.1% est., 2.2% actual, 2.1% prior
NFIB Small Business Optimism (Jul) 104.0 est., 104.7 actual, 103.3 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

Although there were few new economic statistics to consider last week, headlines continued to focus on the economic outlook.  The trade war weighs heavily as its resolution (or lack thereof) will determine the future direction of the US economy.  Currently, the consumer remains healthy, as job openings are plentiful, jobless claims low and inflation tame.  Nonetheless, assessing how the additional $300 billion in tariffs will affect the consumer has economists lowering their growth outlook for the remainder of 2019 and 2020.

Capital market participants continued to digest the likelihood of a prolonged trade war last week.  Market action was reflective of mounting concerns as longer-dated interest rates fell and stocks reacted negatively.  The S&P 500 Index sank -0.4% while the Dow Jones Industrial Average lost -0.6%.  Sector performance was mixed with defensive areas doing well while sectors exposed to weaker growth suffered (i.e., technology, financials and energy).  International markets also declined, as developed foreign stocks slumped -1.1% and emerging markets fell -2.2%.  The 10-year Treasury’s yield fell to 1.75% from 1.86% the prior week, which once again sent bond prices higher.  Similar to stocks, high-yield bonds slumped last week, but the Barclay’s Aggregate Bond Index, US corporate bonds and 10-year municipals all climbed more than 0.5%.

10-Year Treasury Yield for the Week of August 5th