General market news
- The 10-year Treasury opened at 2.16 percent early Monday, down from a high of 2.22 percent last week. This marks the third time in a week that the 10-year has tested the 2.16 percent level. The 30-year yield opened at 2.74 percent, its lowest level since June 26 and its second-lowest level since the November election.
- S. markets bounced back from two consecutive down weeks as Washington returned its focus to tax reform. As a result, the Nasdaq Composite moved 0.80 percent higher. It was followed by the S&P 500 Index and the Dow Jones Industrial Average, which gained 0.75 percent and 0.71 percent, respectively.
- In an interview last week, Gary Cohn, director of the White House Economic Council, stated that a lot of progress had been made on tax reform and that he ultimately believed a tax reform bill could be passed by year-end. Unfortunately, this positive news was offset somewhat by a statement from President Trump that he would allow a government shutdown October 1 if Congress didn’t approve funding for a border wall with Mexico.
- Both Federal Reserve (Fed) Chair Janet Yellen and European Central Bank President Mario Draghi offered little in terms of monetary policy at the annual Fed meeting in Jackson Hole last Friday. The next Fed meeting will come with much anticipation, as investors wait for more information regarding rates and the schedule to reduce the Fed’s balance sheet.
- New home sales came in much lower than expected, with 571,000 new homes sold versus the consensus estimate of 610,000. The prior month’s numbers were revised up from 610,000 to 630,000. There was a slight increase in supply, which was a positive sign. Existing home sales also came in at the low end of the consensus estimate with a reading of 5.44 million homes sold. The weakness in existing home sales has been affected by supply, which also fell, by 1 percent, for the month.
- Durable goods orders declined as expected with a month-over-month change of –6.8 percent. This was largely due to a steep decline in aircraft orders; taking transportation out of the equation results in a 0.5-percent increase in orders. A sharp pickup in shipments of core capital goods—with an increase of 1 percent for the month (and a revised increase of 0.2 percent in the prior month)—will help increase the overall gross domestic product for the quarter.
|MSCI Emerging Markets||2.46%||1.95%||28.20%||24.02%|
|Fixed Income Index||Month-to-Date||Year-to-Date||12-Month|
|U.S. Broad Market||0.65%||3.38%||0.57%|
What to look forward to
There wasn’t a lot of economic news to review last week. This week, we’ll see a number of data points that have the potential to move markets.
First, we’ll get a look at consumer confidence with the Conference Board’s survey. Last week, another popular measure of consumer confidence produced by Bloomberg rose to a 16-year high. A similar increase is expected for the Conference Board’s measure.
On Thursday, personal income and spending data will be released. Given the ongoing strength of the job market, both of these figures are expected to increase. A surge in retail sales data earlier this month indicates that there might be some upside potential here as well.
Speaking of the job market, on Friday we’ll see the August employment report. Consensus forecasts call for an addition of 180,000 jobs, with the unemployment rate staying at 4.3 percent. Because of the tight labor situation, average hourly earnings are expected to increase.
Finally, the Institute for Supply Management will release its manufacturing index on Friday. This measure is expected to increase slightly from 56.3 to 56.4, due in large part to a recovery in manufacturing activity. The recent decline of the U.S. dollar has helped manufacturers compete globally, and an increase in this measure will be considered a boon for the economy.