Week of January 21 - 25, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

January 29, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jan 19) 218k est., 199k actual, 212k prior
Continuing Claims (Jan 12) 1730k est., 1713k actual, 1737k prior
Richmond Federal Reserve Manufacturing Index (Jan) -2 est., -2 actual, -8 prior
Kansas City Federal Reserve Manufacturing Activity (Jan) 3 est., 5 actual, 6 prior: R+
Chicago Federal Reserve National Activity Index (Dec) 0.27 actual, 0.21 prior: R-
Dallas Federal Reserve Manufacturing Activity (Jan) -2.7 est., 1.0 actual, -5.1 prior
FHFA House Price Index MoM (Nov) 0.3% est., 0.4% actual, 0.4% prior: R+
S&P CoreLogic CS 20-City YoY (Nov) 4.89% est., 4.68% actual, 5.02% prior
Markit U.S. Manufacturing PMI (Jan P) 53.5 est., 54.9 actual, 53.8 prior
Markit U.S. Services PMI (Jan P) 54.0 est., 54.2 actual, 54.4 prior
Leading Index (Dec) -0.1% est., -0.1% actual, 0.2% prior
Conference Board Consumer Confidence (Jan) 124.0 est., 120.2 actual, 128.1 prior
Conference Board Present Situation (Jan) 169.6 actual, 169.9 prior: R-
Conference Board Expectations (Jan) 87.3 actual, 97.7 prior: R-

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

Capital Market Implications

Although economic activity remained mixed, several regional manufacturing reports released last week showed stronger than anticipated activity in January. Nonetheless, leading economic indicators for December turned down for the second time in three months. December’s stock market correction was the single largest contributor to the index’s decline, but ISM new orders and building permits were also negative. As the index is designed to forecast economic activity over the next six months, it suggests U.S. growth will be closer to 2.0% going forward than the 3.0% we experienced in 2018. International growth also remained mixed, as gross domestic product decelerated in China last year but recent retail sales and industrial production reports were above estimates.

Last week, with fourth-quarter earnings reports in full swing, stocks fell early in the week only to recovered by Friday. For the week overall, the Dow Jones Industrial Average and the S&P 500 Index ended flat. In general, earnings reports were encouraging, which boosted autos, homebuilders and utilities. The sectors that lagged last week included drugs, staples and energy. International had a strong showing for the week, as foreign developed markets rose 0.5% and emerging markets increased 1.4%. Although interest rates held steady last week, corporate bond prices climbed as credit spreads continued to tighten. The U.S. Barclay Aggregate Bond Index gained 0.3% for the week and U.S. corporate bonds rose 0.7%. Ten-year municipal bonds and high yield bonds ended the week unchanged.