Week of January 14 - 18, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

January 23, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jan 12) 220k est., 213k actual, 216k prior
Continuing Claims (Jan 5) 1734k est., 1737k actual, 1722k prior
Import Price Index YoY (Dec) -0.8% est., -0.6% actual, 0.5% prior: R-
Export Price Index YoY (Dec) 1.1% actual, 1.8% prior
NAHB Housing Market Index (Jan) 56 est., 58 actual, 56 prior
Philadelphia Federal Reserve Business Outlook (Jan) 9.0 est., 17.0 actual, 9.4 prior
Bloomberg Consumer Comfort (Jan 13) 58.1 actual, 58.5 prior
Bloomberg Economic Expectations (Jan) 44.5 actual, 50.0 prior
Industrial Production MoM (Dec) 0.2% est., 0.3% actual, 0.4% prior: R-
Capacity Utilization (Dec) 78.5% est., 78.7% actual, 78.6% prior+
University of Michigan Sentiment Index (Jan P) 96.8 est., 90.7 actual, 98.3 prior
U. of Michigan Current Conditions (Jan P) 116.0 est., 110.0 actual, 116.1 prior
U. of Michigan Expectations (Jan P) 86.5 est., 78.3 actual, 87.0 prior
Existing Home Sales (Dec) -1.5% est., -6.4% actual, 2.1% prior: R+

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

Capital Market Implications

Last week, again due to the government shutdown, a number of major economic releases (retail sales, housing starts, building permits, etc.) were postponed.  Consumer sentiment continued to soften in January, as the prolonged government shutdown and the trade impasse between the U.S. and China weighed on consumers.  Similar to the Conference Board survey, the respondents to the University of Michigan Consumer Sentiment Index indicated they were more concerned about their future prospects than their current situation.  On the other hand, the more concrete data reports such as industrial production were more sanguine.  Production in December remained positive and, in January, the Philadelphia Fed Business Outlook jumped unexpectedly suggesting economic conditions are not softening as quickly or as much as the consumer confidence data would imply.   

Stocks marched higher again last week, as the rebound that began during the holiday season continued. For the week overall, the Dow Jones Industrial Average and the S&P 500 Index climbed about 3.0% and, for the year thus far, both indices are up on average 6.0%. Last week, encouraged by better-than-expected bank earnings, investors drove the financial sector higher by 6.0% while only the utility sector was negative for the week.  On the international front, foreign developed markets rose 1.0% and emerging markets increased 1.7%. Although the yield on the 10-year Treasury climbed throughout the week, credit spreads tightened, which allowed most bond sectors to improve.  Last week, the U.S. Barclay Aggregate Bond Index fell only slightly while corporate bonds and ten-year municipal bonds held.  For the third consecutive week, high yield bonds rallied, which brought their year-to-date gain to more than 3.5%.