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Weekly Market Update, September 17, 2018

Posted by Paul Miller

General market news        

  • Rates moved higher last week. The 10-year Treasury yield went from 2.87 percent to more than 3 percent this morning. The 3-year bond is now yielding what the 10-year was last week, and the 2-year is yielding what the 10-year was two weeks ago. As rates continue to compress and push up closer to a ceiling, the bond market seems to be telling us that while the economy looks good, there are factors indicating a recession in the future. The Federal Reserve (Fed) seems committed to raising rates. Keep in mind, however, that the Fed uses its “language” as a policy tool as well.
  • All three major U.S. indices, the Russell 2000, and both the MSCI EAFE and MSCI Emerging Markets indices were up last week. Both improvement in fundamentals and the expectation of resumed trade talks between the U.S. and China were also in the news. The Wall Street Journal reported on Wednesday that Treasury Secretary Steven Mnuchin had reached out to continue trade talks with China. This was confirmed by the Chinese Foreign Ministry, which had reportedly welcomed the offer. Further, the Turkish Central Bank surprised last week when it increased the one-week repo rate by 625 basis points. This move followed the country’s continued currency weakness after the U.S. doubled its tariffs of Turkish steel and aluminum last month.
  • Despite both Goldman Sachs and Stifel raising concerns over a potential peak in the memory chip cycle, the S&P 500’s technology sector posted a 1.83-percent gain. This move was supported both by Qualcomm announcing $16 billion of its common stock as the first phase of its $30 billion buyback plan and by a 1.2-percent move in Apple following the release of three new iPhones and a new version of the Apple watch.
  • Economic news regarding inflation and consumer spending was released last week. On Wednesday, the Producer Price Index declined by more than expected, leaving annual inflation for producers at 2.8 percent. On Thursday, the Consumer Price Index showed a similar decline, with annual inflation of 2.7 percent.
  • On Friday, August retail sales came in lower than expected at 0.2-percent growth month-over-month. July’s figure was revised upward, however, accounting for the lower-than-expected growth in August.

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Weekly Market Update, September 10, 2018

Posted by Paul Miller

General market news                                  
      • Rates finished last week by moving higher. Short rates moved the most, as the 2-year Treasury yield opened on Monday at 2.70 percent. The 10-year had been at 2.80 percent a week and a half ago but opened Monday at 2.93 percent. The 30-year opened at 3.09 percent. The curve-flattening process is getting upward pressure from short rates as the market anticipates the Federal Reserve (Fed) moving short rates higher this fall. Long rates seem to be hitting a ceiling for the time being.
      • All three major U.S. averages moved lower last week. The tech-heavy Nasdaq Composite Index had the largest loss in months, as technology shares had a large sell-off. Facebook and Twitter executives testified before Congress about foreign interference in U.S. elections and what steps are being taken to mitigate that, and investors responded negatively to the outcome. The energy sector further pressed U.S. markets lower as investors sold off in response to rising U.S. oil inventories. Finally, Chinese tariff talks have weighed on markets recently, but nothing has been implemented. The U.S. administration is evaluating the effects of the latest proposed round of tariffs before acting.
      • Last week, several important economic reports were released. On Tuesday, the Institute for Supply Management (ISM) Manufacturing index defied expectations and rose to 61.3 from an already strong 58.1. On Thursday, the ISM Nonmanufacturing index also came in better than expected, jumping from 55.7 to 58.5. These positive results show that business confidence remains high.
      • On Friday, the August employment report came in better than expected, with 201,000 new jobs added during the month. The underlying data was also strong, with unemployment remaining steady at 3.9 percent and average wage growth increasing to 2.9 percent annualized.


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Weekly Market Update, September 4, 2018

Posted by Paul Miller

General market news                  
  • Volatility was back in rates last week. The 10-year Treasury yield went from as low as 2.80 percent to as high as 2.90 percent; it ended the week at 2.86 percent, where it opened on Monday. Meanwhile, the 30-year was at 2.95 percent early last week before selling for 3.03 percent midweek; it was back to 2.97 percent by Friday and opened at 3.04 percent on Monday morning. The uncertainty here stemmed mostly from unclear political direction, tariffs, and trade wars.
  • All three major U.S. markets moved higher last week. The Nasdaq Composite Index led the way, with technology, consumer discretionary, and health care among the top performers. Bond proxies (telecom, utilities, staples) lagged, however, as the week favored a risk-on rally ahead of a widely expected September rate hike. The major news last week was the U.S.–Mexico trade agreement, which seemed to ease the minds of investors, even as trade concerns between the U.S. and China continued to grab headlines. Meanwhile, the U.S. and Canada are set to resume their trade talks this week.
  • Last week was active on the economic update front. On Tuesday, the Conference Board Consumer Confidence Index surprised to the upside. It jumped from 127.4 to 133.4—the highest level in nearly 18 years.
  • On Wednesday, the second estimate of second-quarter gross domestic product growth also came in better than expected. This measure of overall economic activity was revised up to 4.2-percent annualized growth.
  • Finally, on Thursday, personal income and spending figures from July were released. These came in at 0.3 percent and 0.4 percent, respectively, which represents healthy growth levels.

What to look forward to 

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Weekly Market Update, August 27th 2018

Posted by Paul Miller

GENERAL MARKET NEWS
  • On Monday morning, the 10-, 30-, and 2-year Treasuries opened at 2.81 percent, 2.96 percent, and 2.62 percent, respectively. The spread between the 2- and 10-year notes is again at its flattest level in this economic cycle. Historically, an inverted yield curve—where rates on the short end are higher than on the long end—has been a very strong indicator of an economic recession. We seem to be getting much closer to an inversion as we head into fall. Usually, once the curve inverts, a recession occurs within the following 12 to 18 months.
  • S. markets moved higher last week, ignoring domestic political concerns and a midweek trade discussion between the U.S. and China. The energy and technology sectors helped fuel the uptick. A move in oil was supported by a 4.3-percent increase in West Texas Intermediate crude, which bounced back after dropping for six of the previous seven weeks. Sector laggards for the week included consumer staples, utilities, and REITs.
  • Last week also saw the release of a handful of important economic data points. On Wednesday, existing home sales disappointed, declining 0.7 percent against expectations for a modest 0.4-percent increase. On Thursday, new home sales also came in below expectations, falling 1.7 percent, against expectations for a 2.2-percent uptick. Given climbing home prices, low supply, and rising interest rates, a slowdown in housing growth may be in the cards.
  • On Friday, durable goods orders for July came in below expectations, down 1.7 percent. The drop follows several months of robust growth, so this result is not a cause for concern.
  • Finally, also on Friday, Federal Reserve (Fed) Chair Jerome Powell made his first speech at the annual Jackson Hole Economic Policy Symposium. Many interpreted his remarks to be slightly dovish, suggesting that the Fed would continue its gradual path of rate hikes.

What to look forward to

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Weekly Market Update, August 20th 2018

Posted by Paul Miller

 General market news               

  • On Monday morning, the yield for the 10-year Treasury opened at 2.85 percent, closer to the bottom of the range in which it had been trading in recent days. The yields for the 30- and 2-year Treasuries were 3.01 percent and 2.6 percent, respectively. Most parts of the curve opened at or close to the flattest they’ve been in this cycle, with the spread between the 2- and 10-year notes at less than 24 basis points (bps). The difference between yields on the 2- and 30-year Treasuries was down to only 39 bps—just above its most recent low.
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Weekly Market Update, August 13th 2018

Posted by Paul Miller

 

General market news                

  • Rates opened lower across the curve on Monday, with yields for the 10-, 30-, and 2-year Treasuries at 2.84 percent, 3.02 percent, and 2.58 percent, respectively. The spread between short and long rates continued to be off its July 9 low, although it has come down considerably from its late July widening. Investors seem to be debating whether to bet on a strong U.S. economy or volatile global markets. The uncertainty surrounding policy continues to complicate the decision.
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Weekly Market Update, August 6th 2018

Posted by Paul Miller

General market news           

  • After jumping as high as 3.01 percent last Wednesday—the same day that the Federal Reserve (Fed) decided not to raise rates—the yield for the 10-year Treasury opened at 2.95 percent this morning. The yield for the 30- and 2-year Treasuries opened at 3.09 percent and 2.64 percent, respectively.
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Market Thoughts for August 2018 - Video

Posted by Paul Miller

Brad McMillan, Commonwealth’s CIO, recaps the market and economic news for July. It was a great month for U.S. markets, as the Dow, S&P 500, and Nasdaq were all up. And after a terrible June, both developed and emerging markets bounced back as well. This performance was supported by a strong economy. GDP growth for the second quarter came in at the highest level since 2014, both employment and inflation are in healthy territory, and corporate earnings continue to beat expectations. Can this positive momentum continue?

 

Market Thoughts for August 2018 from Commonwealth Financial Network on Vimeo.

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Weekly Market Update, July 30th 2018

Posted by Paul Miller

 General market news          

  • Rates were up across the curve last week, as the 10-year, 30-year, and 2-year Treasuries reached 2.98 percent, 3.10 percent, and 2.67 percent, respectively. The yield curve did steepen, but it remains close to cycle lows. With the recent market resistance, it will be interesting to see if rates move above resistance levels or if the curve continues to flatten.
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The Basics of Credit Scores and Credit Reports

As consumers, we know that having a good credit score is important. Whether you are applying for a loan or signing up for a credit card, your credit score plays a major role in determining if you will be approved. Your credit score can also have a significant impact on loan terms and borrowing costs. 

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Weekly Market Update, July 23th 2018

Posted by Paul Miller

General market news                  

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Weekly Market Update, July 16th 2018

Posted by Paul Miller

General market news

  • The Treasury yield curve continues to flatten, with the 10-year, 30-year, and 2-year Treasuries coming in on Monday morning at 2.83 percent, 2.94 percent, and 2.60 percent, respectively. The difference in yield between the 2-year and 30-year Treasuries is at a cycle low of 34 basis points (bps). The difference in yield between the 5-year and 10-year Treasuries is down to 9.7 bps, and the difference between the 2-year and 5-year Treasuries is 14.8 bps.
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2018 Midyear Outlook: Will the Economy and Markets Keep Growing?

Posted by Richard Snelley

After the performance we saw last year, we had high hopes for the economy and markets in 2018, but the first half of the year was disappointing. Expectations softened as the stock market pulled back early in the year, economic growth slowed, and risks—largely in trade—rose. As we hit midyear, though, those initial hopes appear to be more realistic than they were even a month ago.

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Weekly Market Update, July 9th 2018

Posted by Paul Miller

General market news

 

  • On Monday morning, the 10-year, 30-year, and 2-year Treasuries opened at 2.82 percent, 2.93 percent, and 2.53 percent, respectively. The difference between short rates and long rates is at the narrowest level we’ve seen during the current economic expansion—pushing the yield curve flatter. Historically, the curve has been a good indicator of oncoming recessions, and it’s now beginning to show signs that one may be on the horizon.
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Weekly Market Update - July 2, 2018

Posted by Paul Miller

Weekly Market Update, July 2, 2018 

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New Reports Highlight Continuing Challenges for Social Security and Medicare

Posted by Paul Miller

Most Americans will receive Social Security and Medicare benefits at some point in their lives. For this reason, workers and retirees are concerned about potential program shortfalls that could affect future benefits. Each year, the Trustees of the Social Security and Medicare Trust Funds release lengthy annual reports to Congress that assess the health of these important programs. The newest reports, released on June 5, 2018, discuss the current financial condition and ongoing financial challenges that both programs face, and project a Social Security cost-of-living adjustment (COLA) for 2019.

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Weekly Market Update, June 11th 2018

Posted by Paul Miller

General market news

  • The 10-year Treasury yield opened at 2.95 percent on Monday morning, while the 30-year opened at 3.10 percent and the 2-year at 2.52 percent. The Federal Reserve (Fed) is set to raise rates this week, and we may also learn news on its outlook for the remainder of the year and any possible changes to current policy. With the yield curve at or close to its flattest in the current cycle, any slight change to policy could send it closer to possible inversion.
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Weekly Market Update, June 4th 2018

Posted by Paul Miller

General market news

  • The 10-year Treasury yield opened at 2.90 percent on Monday morning. This result was up from last week’s low of 2.75 percent, but it was well below the recent high of 3.12 percent. Meanwhile, the 30-year opened at 3.05 percent and the 2-year at 2.48 percent. Uncertainty with trade policy is causing some concerns globally and is pushing the yield curve flatter.
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Market Thoughts for June 2018 - Video

Posted by Paul Miller

Brad McMillan, Commonwealth’s CIO, recaps the market and economic news for May. It was a good month, continuing the recovery from the pullback we saw at the start of the year. In the U.S., markets were up almost across the board. Consumers continue to spend, and businesses remain confident—with manufacturing doing particularly well. Plus, the government is contributing to this growth by cutting taxes and spending more. When we look at emerging and developing markets, however, it's a different story.

 

Market Thoughts for June 2018 from Commonwealth Financial Network on Vimeo.

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Weekly Market Update, May 28, 2018

Posted by Paul Miller

General market news

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