Week of January 7 - 11, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

January 15, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jan 5) 226k est., 216k actual, 233k prior
Continuing Claims (Dec 29) 1740 est., 1722actual, 1750 prior: R+
NFIB Small Business Optimism (Dec) 103.0 est., 104.4 actual, 104.8 prior
JOLTS Job Openings (Nov) 7050 est., 6888 actual, 7131 prior: R+
Consumer Credit (Dec) $17.500b est., $22.149b actual, $24.980b prior: R-
PPI Final Demand MoM (Dec) -0.1% est., -0.2% actual, 0.1% prior
PPI Ex Food & Energy MoM (Dec) 0.2% est., -0.1% actual, 0.3% prior
PPI Final Demand YoY(Dec) 2.5% est., 2.5% actual, 2.5% prior
PPI Ex Food & Energy YoY (Dec) 2.9% est., 2.7% actual, 2.7% prior
CPI MoM (Dec) -0.1% est., -0.1% actual, 0.0% prior
CPI YoY (Dec) 1.9% est., 1.9% actual, 2.2% prior
CPI Ex Food & Energy YoY (Dec) 2.2% est., 2.2% actual, 2.2% prior
Real Average Weekly Earnings YoY (Dec) 1.2% est., 1.2% actual, 0.6% prior: R+
Empire Manufacturing (Jan) 10.0 est., 3.9 actual, 10.9 prior

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

Capital Market Implications

Due to the government shutdown a number of economic releases were postponed last week, however those reports that were issued painted a mixed picture of the economy.  Labor continued to do well as evidenced by the strength of the job market in December and the low level of weekly jobless claims.  And, while wage gains are evident (wages climbed 3.2% in 2018), both consumer and producer prices fell in December indicating inflationary pressures remain contained.  All of which is beneficial to the consumer.  On the other hand, impacted by slower global growth as well as actual and potential trade tariffs, U.S. manufacturing decelerated again in December.    

Last week, stocks rallied, as market participants were encouraged by the “Fed is on hold” comments from several Fed officials.  For the week overall, large-capitalization stock indices rose approximately 2.5% and small-cap stocks surged 4.0%.  Economically sensitive sectors including industrials and real estate gained more than 4.0% last week while more defensive sectors such as utilities and consumer staples increased less than 1.0%.  International bourses demonstrated strength, as the MSCI EAFE Index moved up 2.9% and emerging markets climbed 3.8%.  With inflationary gauges demonstrating limited upward pressure, bonds also had a good week.  The U.S. Barclay Aggregate Bond Index ended unchanged, while corporate bonds and ten-year municipal bonds rose slightly.  High yield bonds outperformed for the second consecutive week, as they rallied 1.9% on the week and gained 3.1% for the year thus far.