Week of January 20 - 24, 2020

Maureen Kelliher, CFA

Maureen Kelliher, CFA

January 29, 2020

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jan 18) 214k est., 211k actual, 205k prior
Continuing Claims (Jan 11) 1756k est., 1731k actual, 1768k prior
Chicago Federal Reserve National Activity Index (Dec) 0.13 est., -0.35 actual, 0.41 prior: R-
Kansas City Federal Reserve Manufacturing Activity (Jan) -6 est., -1 actual, -8 prior
Dallas Federal Reserve Manufacturing Activity (Jan) -2.0 est., -0.2 actual, -3.2 prior
Richmond Federal Reserve Manufacturing Activity (Jan) -3 est., 20 actual, -5 prior
FHFA House Price Index MoM (Nov) 0.3% est., 0.2% actual, 0.4% prior: R+
Existing Home Sales MoM (Dec) 1.5% est., 3.6% actual, -1.7% prior
Leading Index (Dec) -0.2% est., -0.3% actual, 0.1% prior: R+
Markit US Manufacturing PMI (Jan P) 52.5 est., 51.7 actual, 52.4 prior
Markit US Services PMI (Jan P) 53.0 est., 53.2 actual, 52.8 prior
Durable Goods Orders (Dec P) 0.3% est., 2.4% actual, -3.1% prior: R-
New Home Sales MoM (Dec) 1.5% est., -0.4% actual, -1.1% prior: R-
Conference Board Consumer Confidence (Jan) 128.0 est., 131.6 actual, 128.2 prior: R+
S&P CoreLogic CS 20-City Pricing YoY (Nov) 2.40% est., 2.55% actual, 2.23% 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’s news from Asia took a turn for the worst, as the coronavirus continued to spread in spite of the Chinese government’s efforts to contain it.  China will now remain closed beyond the Lunar New Year holiday limiting economic activity and resetting any possible rebound in the global economy.  None of which bodes well for a sustained pick-up in manufacturing here in the US.  This is unfortunate, as regional Federal Reserve manufacturing surveys, although not all positive, had shown improvement in January.  Housing continued to demonstrate strength in December, as low inventory levels, attractive mortgage rates and home price increases fueled housing starts.  Consumer confidence also remained near historic highs last month.

Capital market participants decided to book profits last week, as health reports out of China darkened.  As such, the S&P 500 Index and the Dow Jones Industrial Average, after having reached new highs the week before, both retreated more than -1.0% last week.  The week’s sell-off was broad-based, as only utilities, real estate and technology remained in positive territory by Friday’s close.  The Chinese market was hit the hardest and thus emerging markets were off -2.4% for the week while developed foreign markets fared better, down just -0.6%.  With fears rising, safe haven assets caught a bid and that included US bonds.  For the week overall, the Barclay’s US Aggregate Index gained 0.8%, US corporate bonds surged 1.0% and 10-year municipals bonds rose 0.4%.  High yield bonds were the week’s only losers having declined -0.4%.