Week of March 23 - 27, 2020

Maureen Kelliher, CFA

Maureen Kelliher, CFA

April 1, 2020

Weekly Economic Review

Weekly Macro Updates

GDP Annualized QoQ (4Q T) 2.1% est., 2.1% actual, 2.1% prior
PCE Core Deflator YoY (Feb) 1.7% est., 1.8% actual, 1.7% prior: R+
Initial Jobless Claims (Mar 21) 1700k est., 3283k actual, 282k prior: R+
Continuing Claims (Mar 14) 1791k est., 1803k actual, 1702k prior: R+
U. of Mich. Current Conditions (Mar F) 90.0 est., 89.1 actual, 95.9 prior
U. of Mich. Sentiment (Mar F) 106.0 est., 103.7 actual, 112.5 prior
U. of Mich. Expectations (Mar F) 77.0 est., 79.7 actual, 85.3 prior
U. of Mich. 1 Year Inflation (Mar F) 2.2% actual, 2.3% prior
New Homes Sales (Feb) 750k est., 765k actual, 800k prior: R+
Pending Home Sales NSA YoY (Feb) 6.5% est., 11.5% actual, 6.7% prior
Durable Goods Orders (Feb P) -0.9% est., 1.2% actual, 0.1% prior: R+
Durables ex Transportation (Feb P) -0.4% est., -0.6% actual, 0.6% prior: R+
Markit US Services PMI (Mar P) 42.0 est., 39.1 actual, 49.4 prior
Markit US Composite PMI (Mar P) 40.5 actual, 49.6 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 releases reflected a mix of February reports showing the strength of the economy going into the coronavirus pandemic and the first March reports showing the pandemic’s subsequent effects.  Dominating headlines were initial jobless claims of over 3 million as layoffs, particularly in the service industry, began to be felt throughout the economy.  The Services PMI report also continued to show weakness.  University of Michigan surveys reflected dampened sentiment and muted expected inflation, although one-year expectations surprised to the upside.  New and pending home sales numbers for February reflected the strength of the housing market prior to the pandemic. 

Stocks ended the week with positive returns although volatility remained high and year-to-date performance is negative.  The S&P 500 Index gained 10.3% for the week while the Dow Jones index gained 12.8%; both indices are down over 20% in 2020.  Small cap stocks gained 11.7% for the week, although the Russell 2000 Index is down 31.9% for the year.  International markets also saw gains for the week with developed markets up 11.2% and emerging markets returning 5.0%; both areas remain down over 23% for the year.  Bonds saw a strong rebound last week as markets stabilized, with the US Aggregate Index gaining 2.7%.  Corporate bonds were up 6.1% while municipals rallied to gain 8.3%.  High yield bonds were up 5.1%.  Bond performance is mixed for the year, with government issuers positive, credit markets negative and municipal bond performance flat year-to-date.

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