Week of June 10 - 14, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

June 19, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jun 8) 215k est., 222k actual, 219k prior
Continuing Claims (Jun 1) 1660k est., 1695k actual, 1693k prior
NFIB Small Business Optimism (May) 102.0 est., 105.0 actual, 103.5 prior
PPI Ex Food & Energy YoY (May) 2.3% est., 2.3% actual, 2.4% prior
CPI Ex Food & Energy YoY (May) 2.1% est., 2.0% actual, 2.1% prior
Real Average Hourly Earnings YoY (May) 1.3% actual, 1.2% prior
Import Price Index YoY (May) -1.2% est., -1.5% actual, -0.3% prior: R-
Export Price Index YoY (May) -0.7% actual, 0.2% prior: R-
Retail Sales Ex Auto & Gas MoM (May) 0.4% est., 0.5% actual, 0.3% prior: R+
Retail Sales Control Group MoM (May) 0.4% est., 0.5% actual, 0.4% prior: R+
Industrial Production MoM (May) 0.2% est., 0.2% actual, -0.4% prior: R+
University of Michigan Sentiment Index (Jun P ) 98.0 est., 97.9 actual, 100.0 prior: R+
Empire Manufacturing (Jun) 11.0 est., -8.6 actual, 17.8 prior
NAHB Housing Market Index (Jun) 67 est., 64 actual, 66 prior

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

Capital Market Implications

Although the majority of last week’s economic releases were sanguine, several reports were less so.  On the positive side, industrial production and retail sales rebounded in May while inflation gauges (PPI & CPI) moderated once again.  Sentiment indexes including homebuilders and small business optimism held or hit new highs.  However, on the other hand, the University of Michigan consumer confidence index while reflecting positive current conditions registered sharp downturns in the expectations for future economic activity (six months from now) and for the price level (inflation rate) in the future.  Additionally, Empire Manufacturing - a regional manufacturing survey - fell sharply, off -8.6 for June, which suggests the global economy continued to soften.

Last week, as capital market participants factored in at least one interest rate cut by the Federal Reserve, stocks performed well throughout the week.  Thus, both the Dow Jones Industrial Average and the S&P 500 Index climbed last week by 0.5%.  Sector performance however was more mixed, as retailers were strong, up 2.5%, but the largest sector, technology, was flat.  International markets reversed their recent trend, as emerging markets rose 0.9% while developed foreign markets sank -0.3%. With the potential for an interest-rate cut as soon as July, the yield on the 10-year Treasury note closed the week below 2.1%.  As such, most areas of the bond market, corporates, Treasuries and municipals ended the week with little change.  High yield bonds however continued to rally, up 0.4% for the week.