Week of January 28 - February 1, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

February 6, 2019

Weekly Economic Review

Weekly Macro Updates

FOMC Rate Decision (Upper/Lower Bounds) (Jan 30) 2.25-2.5% est., 2.25-2.5% actual, 2.25-2.5% prior
Unemployment Rate (Jan) 3.9% est., 4.0% actual, 3.9% prior
Average Hourly Earnings YoY (Jan) 3.2% est., 3.2% actual, 3.3% prior: R+
Change in Nonfarm Payrolls (Jan) 165k est., 304k actual, 222k prior: R-
Initial Jobless Claims (Jan 26) 215k est., 253k actual, 200k prior: R+
Continuing Claims (Jan 19) 1721k est., 1782k actual, 1713k prior
Conf. Board Consumer Confidence (Jan) 124.0 est., 120.2 actual. 126.6 prior: R-
Bloomberg Consumer Comfort (Jan 27) 57.4 actual, 57.4 prior
Pending Home Sales NSA YoY (Dec) -7.0% est., -9.5% actual, -7.8% prior: R-
Markit US Manufacturing PMI (Jan F) 54.9 est., 54.9 actual, 54.9 prior
ISM Manufacturing Index (Jan) 54.0 est., 56.6 actual, 60.3 prior
U. of Michigan Sentiment (Jan F) 90.7 est., 91.2 actual, 90.7 prior
U. of Michigan 1 Yr Inflation (Dec P) 2.7% actual, 2.7% prior

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

Capital Market Implications

Last week, as expected, the Federal Reserve left rates unchanged, citing low inflation, slowing growth globally and the need for patience in future rate moves.  Contrary to this, and in spite of the addition of some federal workers to the unemployment numbers, private employers added far more jobs than expected in January.  This marked the 100th consecutive month of job growth, with wages continuing to rise and workers reentering the workforce.   Pending home sales showed some continued weakness due to rising mortgage rates and high prices, as well as reduced confidence from stock market volatility.  Manufacturing releases were generally in line with expectations as orders were strong in spite of continuing uncertainty over tariffs.

Stocks rose again last week, with both domestic and international markets up strongly so far in 2019.  The S&P 500 Index gained 1.6%, while the Dow Jones and the Russell 2000 indices were both up 1.3%.  Value and growth stocks both gained 1.7% for the week.  International markets were in line with the U.S., with developed markets gaining 1.0% and emerging markets up 1.7%.  All of the sectors of the market were positive for the week with the exception of consumer discretionary stocks, which were down slightly.  Bonds were also positive for the week with the aggregate index returning 0.5%.  Corporates, including high yield bonds, were up close to 1.0% while municipals returned 0.4%.