General market news
- The yield on the 10-year Treasury opened at 2.20 percent Monday morning, its lowest level since last November. It took roughly three days for the 10-year to move from 1.82 percent to 2.20 percent following the election on November 7; as rates currently have momentum, we could see the 10-year move to 2 percent or even lower in the near future. The 30-year Treasury yield opened Monday at 2.89 percent, and the 2-year was back to 1.19 percent after touching a recent high of 1.37 percent.
• All three major indices lost ground last week. The Nasdaq led the move downward, falling 1.29 percent, while the S&P 500 and Dow Jones Industrial Average declined 1.18 percent and 0.99 percent, respectively. Rising geopolitical tensions, which included continued talk of U.S. action in Syria, the U.S.’s dropping of the largest non-nuclear bomb in Afghanistan, and China’s deployment of troops along its border with North Korea, contributed to the decline. In addition, in a Wall Street Journal interview, President Trump seemingly reversed some of his campaign statements—mainly, that he would no longer label China a currency manipulator; that NATO is not obsolete, as it is contributing to the fight against; and that he would possibly nominate Federal Reserve Chair Janet Yellen to a second term—and markets took notice. Financials and technology led the sell-off last week, while consumer staples, utilities, and real estate were the top performers.
• Last week’s economic data was slightly disappointing. The Jobless Claims report was unchanged and remains near historic lows. This is an encouraging sign for the U.S. jobs market following poor data released the week before. Both the Consumer Price Index and retail sales data came in below expectations. Although the inflation data was weaker than expected, the report is not likely to alter the odds of a rate hike in June, as weather largely affected the outcome. The poor retail data indicates that, although consumer confidence remains near multi-decade highs, this confidence hasn’t yet translated into consumer spending.
|MSCI Emerging Markets||0.54%||0.54%||12.06%||17.15%|
|Fixed Income Index||Month-to-Date||Year-to-Date||12-Month|
|U.S. Broad Market||0.93%||1.75%||.95%|
Source: Morningstar Direct
What to look forward to
Data surrounding the housing industry will be the main focus this week. On Monday, the National Association of Home Builders Housing Market Index, an important gauge of home builder confidence, will be released. It is expected to remain near its current high levels.
This announcement will be followed on Tuesday by the release of Housing Starts and Building Permits data; both measures directly affect the future supply of housing stock.
Finally, Existing Home Sales data will be released on Friday. This figure is expected to rebound from a surprise decline last month that was caused primarily by a lack of supply.