Week of October 15 - 19, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 23, 2018

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Oct 13) 211k est., 210k actual, 215k prior

Continuing Claims (Oct 6) 1663k est., 1640k actual, 1653k prior

Industrial Production MoM (Sep) 0.2% est., 0.3% actual, 0.4% prior

Capacity Utilization (Sep) 78.2% est., 78.1% actual, 78.1% prior: R-

Chicago Fed National Activity Index (Sep) 0.21 est., 0.17 actual, 0.27 prior: R+

Manufacturing Production (Sep) 0.2% est., 0.2% actual, 0.3% prior: R+

Philadelphia Fed Business Outlook (Oct) 20.0 est., 22.2 actual, 22.9 prior

Richmond Fed Manufacturing Index (Oct) 24 est., 15 actual, 29 prior

NAHB Housing Market Index (Oct) 66 est., 68 actual, 67 prior

Housing Starts MoM (Sep) -5.6% est., -5.3% actual, 7.1% prior: R-

Building Permits MoM (Sep) 2.0% est., -0.6% actual, -4.1% prior: R+

Existing Home Sales MoM (Sep) -0.9% est., -3.4% actual, -0.2% prior: R-

Leading Economic Index (Sep) 0.5% est., 0.5% actual, 0.4% prior

JOLTS Job Openings (Aug) 6900 est., 7136 actual, 7077 prior: R+

 Strong or Improving

 Inconclusive or lacking trend

 Weak or declining

R+ Revised up

R- Revised down

Economic releases over the last week highlighted some of the economy’s recent strengths and weaknesses. The housing market continued to soften in September, as although the homebuilder’s sentiment index improved, housing starts, building permits and existing home sales all turned down. The labor market on the other hand showed no sign of slowing, as job openings in August reached an all-time high.  In spite of disruptions from Hurricane Florence, industrial production and factory output continued to demonstrate strength last month. Indeed, demand picked up in the industrial space for consumer goods, business equipment and industrial materials. The outlook for the manufacturing sector however is not all wine and roses. Going forward, the sector faces headwinds including rising costs for materials and supply constraints linked to tariffs and trade tensions with China.

It was wild ride for equity investors last week, with stocks first falling then rising only to close relatively flat overall. For the week, the Dow Jones Industrial Average gained 0.5% while the S&P 500 Index remained unchanged. Sector action was decidedly mixed; the more defensive sectors of consumer staples and utilities gained at least 3.0% while energy and retail stocks lost -2.0%. On the international front, developed markets (as represented by the MSCI EAFE Index) were flat but selling pressure continued in emerging markets, which declined -0.9%. The yield on the 10-year Treasury climbed to 3.2% and thus several sectors of the bond market fell. For the week, the Barclays U.S. Aggregate Bond Index and U.S. corporate bonds lost -0.4% and -0.5%, respectively, but 10-year municipals and high yield bonds managed to close out the week little changed.