Week of September 16 - 20, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

September 24, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Sep 14) 213k est., 208k actual, 206k prior
Continuing Claims (Sep 7) 1672k est., 1661k actual, 1674k prior
Housing Starts MoM(Aug) 5.0% est., 12.3% actual, -1.5% prior: R+
Building Permits MoM (Aug) -1.3% est., 7.7% actual, 6.9% prior: R-
Philadelphia Federal Reserve Business Outlook (Sep) 10.5 est., 12 actual, 16.8 prior
Leading Economic Indicators Index (Aug) -0.1% est., 0.0% actual, 0.4% prior: R-
Existing Home Sales MoM (Aug) -0.7% est., 1.3% actual, 2.5% prior
Chicago Federal Reserve National Activity Index (Aug) -0.03 est., 0.10 actual, -0.41 prior: R-
Household Change in Net Worth (2Q) $1830b actual, $5311b prior: R+
Markit US Manufacturing PMI (Sep P) 50.4 est., 51.0 actual, 50.3 prior
Markit US Services PMI (Sep P) 51.4 est., 50.9 actual, 50.7 prior
Markit US Composite PMI (Sep P) 51.0 actual, 50.7 prior
Richmond Federal Reserve Manufacturing Index (Sep) 1 est., -9 actual, 1 prior
Conference Board Consumer Confidence Index (Sep) 133.0 est., 125.1 actual, 135.1 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

For the first time in some time, there was good news from the housing front last week. Three major housing indicators, building permits, housing starts and existing home sales, all posted strong numbers in August, with starts up double-digits. The week’s remaining economic releases however were more mixed. Preliminary PMI reports for September were just barely positive and regional Federal Reserve manufacturing surveys continued to flash weakness, especially in the South. Consumer confidence slipped again in September, as attitudes regarding current conditions held but confidence in future conditions declined.

As expected, the Federal Reserve lowered interest rates by a quarter-percentage point last week. The Fed’s forward guidance though was more nuanced and thus the week’s market reaction was mixed, with stocks fading on the news while bonds rallied. For the week overall, the S&P 500 Index fell -0.5% the Dow Jones Industrial Average sank -1.0%. The weakest sector performances were concentrated in industrial and retail stocks, which were off more than 1.0%, while rate sensitive sectors including utilities and real estate outperformed, up over 2.0%. International markets had a quiet week, with both developed and emerging markets declining less than -0.5%. As the yield on the 10-year Treasury note closed the week at 1.7%, a decline of 15 basis points, bonds fared well last week. The Barclays aggregate bond index and US corporate bonds on overage gained 1.0% while high yield and ten-year municipal bonds ended the week little changed.