Week of December 3 - 7, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

December 12, 2018

Weekly Economic Review

Weekly Macro Updates

Unemployment Rate (Nov) 3.7% est., 3.7% actual, 3.7% prior
Labor Force Participation Rate (Nov) 62.9% est., 62.9% actual, 62.9% prior
Initial Jobless Claims (Dec 1) 225k est., 231k actual, 235k prior: R+
Continuing Claims (Nov 24) 1690k est., 1731k actual, 1705k prior: R-
Average Hourly Earnings YoY (Nov) 3.1% est., 3.1% actual. 3.1% prior
Nonfarm Productivity (3Q F) 2.3% est., 2.3% actual, 2.2% prior
Bloomberg Consumer Comfort (Dec 2) 60.3 actual, 60.6 prior
Markit US Composite PMI (Nov F) 54.7 actual, 54.4 prior
ISM Non-Manufacturing Index (Nov) 59.0 est., 60.7 actual, 60.3 prior
Factory Orders (Oct) -2.0% est., -2.1% actual, 0.2%, prior: R-
Durable Goods Orders (Oct F) -2.4% est., -4.3% actual, -4.4%, prior
U. of Michigan Sentiment (Dec P) 97.0 est., 97.5 actual, 97.5 prior
U. of Michigan 1 Yr Inflation (Dec P) 2.7% actual, 2.8% prior

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

Capital Market Implications

In spite of the choppiness in the markets over the past week, economic releases continue to show an overall positive domestic economy.  While unemployment claims showed slightly elevated numbers, the U.S. unemployment rate remained unchanged.  Inflation continues to be muted, with the University of Michigan inflation expectations for the next year, as well as over the next five to ten years, decreasing slightly.  Manufacturing releases were mixed for the week, with orders numbers showing some softening as issues over tariffs and the outlook for global growth persist.

Stock markets fell across the board last week as concerns over slowing global growth, negotiations with China and an inversion in the shorter end of the yield curve (which is often seen as a predictor of a recession approaching) drove investors to sell riskier assets.  The S&P 500 Index was down -4.6%, while the Dow and the Russell 2000 indices were down -4.4% and -5.5% respectively.  Value and growth stocks both traded off over -4.0%.  International markets performed somewhat better than the U.S., with developed markets down -2.3% and the emerging markets falling -1.3%.   Bonds were positive for the week, with the aggregate index gaining 0.9%.  Corporate and municipal bonds were both up 0.8%.  High yield bonds were down slightly at -0.1%, influenced by movements in stocks.