Week of February 18 - 22, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

February 26, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Feb 16) 228k est., 216k actual, 239k prior
Continuing Claims (Feb 9) 1743k est., 1725k actual, 1780k prior
Philadelphia Federal Reserve Business Outlook (Feb) 14 est., -4.1 actual, 17.0 prior
Durable Goods Orders Ex Transportation (Dec P) 0.3% est., 0.1% actual, -0.2% prior: R+
Capital Goods Orders Nondefense Ex. Air (Dec P) 0.2% est., -0.7% actual, -1.0% prior: R-
Markit U.S. Composite PMI (Feb P) 55.8 actual, 54.4 prior
Leading Economic Index (Jan) 0.1% est., -0.1% actual, 0.0% prior: R+
Chicago Federal Reserve National Activity Index (Jan) 0.10% est., -0.43% actual, 0.50% prior: R-
Dallas Federal Reserve Manufacturing Activity (Feb) 4.7 est., 13.1 actual, 1.0 prior
Housing Starts MoM (Dec) -0.1% est., -11.2% actual, 0.4% prior: R-
Building Permits MoM (Dec) -2.6% est., 0.3% actual, 4.5% prior: R-
Existing Home Sales MoM (Jan) 0.2% est., -1.2% actual, -4.0% prior: R+
NAHB Housing Market Index (Feb) 59 est., 62 actual, 58 prior
Conference Board Consumer Confidence 124.9 est., 131.4 actual, 121.7 prior: R+

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

Capital Market Implications

Manufacturing gauges last week indicated that global growth continued to soften in February.  Exporters such as Germany and Japan experienced outright contraction while the U.S. continued to expand, albeit at a decelerated pace.  With only about 11% of GDP exposed to exports, the U.S. has fared better than most during the global trade dispute.  After a weak January, recent U.S. regional manufacturing surveys showed signs of a turnaround and buoyed by hopes of a trade resolution and the reopening of the government consumer confidence staged a healthy rebound in February.  Housing however remained in the doldrums; home prices increased at their slowest pace in four years in December while housing starts declined 11.2%, their poorest level since September 2016.

Last week, as market participants correctly assumed the administration would delay the trade tariff deadline, stocks rose for the ninth consecutive week.  Over the four-day sessions, both the Dow Jones Industrial Average and the S&P 500 Index gained approximately 0.6%.  Stock sector performance was more mixed however than overall index returns, as technology, materials and utilities increased at least 1.5% while banks, health care and energy ended the week flat to down slightly.  International markets were the week’s standouts, as developed markets climbed 1.6% and emerging markets jumped 2.8%.  Interest rates barely budged last week, which held bond prices steady.  As such, most areas of the bond market including the U.S. Barclay Aggregate Bond Index, U.S. corporate bonds and ten-year municipal bonds ended the week unchanged.  Similar to last week, high yield bonds outperformed, having gained 0.4%.