Week of May 20 - 24, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

May 30, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (May 18) 215k est., 211k actual, 212k prior
Continuing Claims (May 11) 1666k est., 1676k actual, 1664k prior
New Home Sales (Apr) -2.5% est., -6.9% actual, 8.1% prior: R+
Markit US Manufacturing PMI (May P) 52.6 est., 50.6 actual, 52.6 prior
Markit US Services PMI (May P) 53.5 est., 50.9 actual, 53.0 prior
Kansas City Federal Reserve Manufacturing Activity (May) 6 est., 4 actual, 5 prior
Durable Goods Orders Ex Transportation (Apr P) 0.1% est., 0.0% actual, -0.5% prior: R-
Capital Goods Orders Nondefense Ex Air (Apr P) -0.3% est., -0.9% actual, 0.3% prior: R-
FHFA House Price Index YoY (Mar) 0.2% est., 0.1% actual, 0.4% prior: R+
S&P CoreLogic CS 20-City Home Price YoY (Mar) 2.50% est., 2.68% actual, 3.0% prior
Conference Board Consumer Confidence (May) 130.0 est., 134.1 actual, 129.2 prior
Conference Board Present Situation (May) 175.2 actual, 168.3 prior
Conference Board Expectations (May) 106.6 actual, 103.0 prior
Dallas Federal Manufacturing Activity (May) 6.2 est., -5.3 actual, 2.0 prior

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

Capital Market Implications

Of late, economic activity both at home and abroad has turned more mixed.  For example, both housing starts and building permits improved in April even as new- and existing-home sales disappointed.  With the recent decline in mortgage rates and the moderation in home prices, there may be a pickup in the housing market this summer.  The manufacturing sector however continues to falter.  In April, durable and capital goods orders (excluding transports) were soft, purchasing manager indexes weakened and regional Fed manufacturing surveys turned down.  On the other hand, due to strong labor markets and wage gains, May’s consumer confidence surveys hit multi-year highs. 

Last week, capital markets continued to react to the fallout from the breakdown of the US-China trade relations.  Although markets attempted to rally mid-week, stocks declined for the week overall. For the full five-day sessions, the Dow Jones Industrial Average slid -0.6% and the S&P 500 Index dropped -1.1%.  Defensive sectors including utilities and health care did well, up over 1.0% for the week, while the sectors most sensitive to the business outlook, energy and technology, closed down nearly -3.0%.  International markets were also soft, as develop foreign markets retreated -0.5% and emerging markets fell -0.9%. Investors maintained their preference for bonds last week, which drove the yield on the 10-year Treasury note close to 2.3%.  As such, other than high yield bonds, which decreased slightly, the bond markets rallied again last week.