Week of November 5 - 9, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

November 14, 2018

Weekly Economic Review

Weekly Macro Updates

FOMC Rate Decision Upper Bound (Nov 8) 2.25% est., 2.25% actual, 2.25% prior
FOMC Rate Decision Lower Bound (Nov 8) 2.00% est., 2.00% actual, 2.00% prior
JOLTS Job Openings (Sep) 7085 est., 7009 actual, 7293 prior: R+
Initial Jobless Claims (Nov 3) 214k est., 214k actual, 215k prior: R+
Continuing Claims (Oct 27) 1634k est., 1623k actual, 1631k prior
Bloomberg Consumer Comfort (Nov 4) 61.3 actual, 60.3 prior
Mortgage Delinquencies (3Q) 4.47% actual, 4.36% prior
U. of Michigan Sentiment (Nov P) 98.0 est., 98.3 actual, 98.6 prior
U. of Michigan Expectations (Nov P) 87.2 est., 88.7 actual, 89.3 prior
U. of Michigan 1 Yr Inflation (Nov P) 2.8% actual, 2.9% prior
U. of Michigan 5-10 Yr Inflation (Nov P) 2.6% actual, 2.4% prior
PPI Final Demand YoY (Oct) 2.5% est., 2.9% actual, 2.6% prior
PPI Ex Food and Energy YoY (Oct) 2.3% est., 2.6% actual, 2.5% prior

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

Capital Market Implications

Mid-term elections drove headline news last week, with results coming in as expected and the markets reacting well.  The Federal Reserve left rates unchanged, citing rising economic activity and continued job growth as reason to continue gradual rate increases; one more rate hike for 2018 is still expected to come in December.  Recent releases continue to show a strong domestic economy, with jobless claims at 50 year lows, job openings greater than the number of unemployed workers and consumer sentiment numbers flat but still elevated.  Inflation releases show levels that are increasing only gradually and neutral over the longer term.  Producer price (PPI) numbers reflect a jump in both services and goods prices, with energy costs a factor.

Stocks saw an overall positive week, with the S&P 500 Index up 2.2% and the Dow gaining 3.0%.  The Russell 2000 Index return was slightly positive, up 0.1%, with value stocks continuing to outperform growth.  Internationally, returns were muted, with the emerging markets the only negative for the week, down -2.0%.  Developed markets were up slightly at 0.2%.  All of the sectors of the stock market were positive last week, with the exception of the communication services sector, which was down 0.2%; health care stocks led the week, returning 4.1%, and are now the best performing sector year-to-date.  Bond markets also saw positive returns, with the U.S. Aggregate Index gaining 0.3%.  Corporate bonds were up 0.5% and municipals increased 0.2%.  High yields bonds lagged the broader market, up slightly at 0.1%.