Week of March 25 - 29, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

April 3, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Mar 23) 220k est., 211k actual, 216k prior: R+
Continuing Claims (Mar 16) 1778k est., 1756k actual, 1743k prior
Conference Board Consumer Confidence Survey (Mar) 132.5 est., 124.1 actual, 131.4 prior
GDP Annualized QoQ (4Q-T) 2.3% est., 2.2% actual, 2.6% prior
New Home Sales MoM (Feb) 2.1% est., 4.9% actual, 8.2% prior: R+
Pending Home Sales MoM (Feb) -0.5% est., -1.0% actual, 4.3% prior: R-
Kansas City Federal Reserve Manufacturing Activity (Mar) 0 est., 10 actual, 1 prior
Personal Income (Feb) 0.3% est., 0.2% actual, -0.1% prior
Real Personal Spending (Jan) 0.3% est., 0.1% actual, -0.6% prior
PCE Deflator YoY (Jan) 1.4% est., 1.4% actual, 1.8% prior: R-
PCE Core YoY (Jan) 1.9% est., 1.8% actual, 2.0% prior: R-
Retail Sales Ex Auto & Gas (Feb) 0.3% est., -0.6% actual, 1.7% prior: R+
ISM Manufacturing (Mar) 54.5 est., 55.3 actual, 54.2 prior
ISM New Orders (Mar) 57.4 actual, 55.5 prior

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

Capital Market Implications

Global purchasing manager’s indexes offered some encouraging news last week.  In particular, the numbers out of China were strong and well above projections.  China’s NBS manufacturing PMI for March rose to 50.5 (indicating expansion when estimates had been for contraction) and their service PMI reached 54.8.  As the Caixin manufacturing PMI also exceeded 50, the levels suggested Asian growth regained momentum at the end of the first quarter.  American ISM reports for March were similar with both manufacturing and non-manufacturing releases signaling expansion.  On the consumer front, January retail sales were revised higher to a healthy 1.7%, but sales in February were tepid off -0.6%. It should be noted though that initial retail sales reports are often noisy (they are extrapolated from activity from the first two weeks of the month) and this time of year they can be especially so as both winter weather and the timing of tax refunds impact them.

After a disastrous end to 2018, capital markets staged an impressive rebound in the first quarter of 2019.  For the quarter, stock markets both at home and abroad increased double digits.  Boosted by its technology weighting, the NASDAQ composite was the quarter’s clear winner having risen nearly 17% while small-capitalization stocks came next, up 14.6%.  The broader-based stock indexes including the S&P 500 Index and the Dow Jones Industrial Average also did well, as they gained 13.7% and 11.8%, respectively.  Although international stocks were the quarter’s laggards, developed and emerging foreign markets still rallied over 10%.  With the yield on the 10-year Treasury note sinking from 2.7% at the beginning of the quarter to 2.4% at the end, bond investors fared well.  For the quarter overall, high yield bonds surged 7.3%, U.S. corporates jumped 5.1% while both 10-year municipal bonds and the Barclay’s U.S. Aggregate Bond Index increased 3.0% or more.