General market news
- The 10-year Treasury opened Monday morning at 2.13 percent, up from a low of 2.08 percent last week, which was its lowest level since November 10, 2016. The 30-year yield opened at 2.75 percent Monday, up from 2.68 percent last week. The 30-year last touched 2.71 percent back in June and is only about 15 basis points above where it stood on November 7.
- Despite both Hurricane Harvey and increasing political tension with North Korea, U.S. markets were up for the second straight week. Tax reform returned to focus, and mergers and acquisitions within health care helped push markets higher. The Nasdaq Composite led the way, increasing by 2.73 percent, following the news that biotech giant Gilead Sciences had proposed a deal to acquire Kite Pharma for almost $12 billion.
- The S&P 500 and Dow Jones Industrial Average were also up, posting gains of 1.43 percent and 0.88 percent, respectively. The market continued to shrug off tensions in international relations and focused on news of improved growth—namely, that U.S. growth for the second quarter was revised up to a 3-percent annual pace, according to a report from the Bureau of Economic Analysis. In addition to health care, technology and materials were the best-performing sectors last week; however, bond proxies, such as telecom and utilities, lagged.
- There were three major data releases last week, and they all pointed toward continued growth. On Thursday, the personal income and outlays data was released. Both had strong results, with income rising 0.4 percent month-over-month against expectations of a 0.3-percent increase. Spending rose 0.3 percent against expectations of a 0.4-percent increase. Both of these figures are quite healthy, and continued growth at these levels could bolster growth for the rest of the year.
- On Friday, the August employment report came in as a mixed bag, with only 156,000 new jobs added against expectations for 180,000 new jobs. The underlying data was also disappointing, with wage growth slowing down and average hours worked decreasing slightly. The slowed hiring pace may be due either to a lack of demand (new jobs) or supply (qualified workers).
- Finally, the Institute for Supply Management Manufacturing Index handily beat expectations by increasing to 58.8, against expectations for only 56.5. This represents the highest reading since April 2011 and shows that manufacturers are optimistic about their prospects going forward.
|MSCI Emerging Markets||0.65%||0.34%||29.03%||25.73%|
|Fixed Income Index||Month-to-Date||Year-to-Date||12-Month|
|U.S. Broad Market||–0.18%||3.45%||0.46%|
What to look forward to
What to look forward to
After a busy week last week, this week will be lighter on the economic news front. We expect only two major releases.
First, durable goods orders data will be released on Tuesday. After a sharp dive in the headline measure in August due to a drop in aircraft orders, this proxy for business confidence is expected to rebound. The core figure strips out transportation equipment, and it is expected to grow modestly as well.
On Wednesday, the Institute for Supply Management will release its nonmanufacturing index. This measure of confidence for the service side of the economy is also expected to increase. Given the strength in manufacturing confidence, any increase in this measure would be considered validation of today’s continuing economic strength.