General market news
- The 10-year Treasury opened at 2.81 percent this week, slightly lower than last Monday’s open. In fact, this yield is at the low end of the range the 10-year has been trading in for the past month. The 30-year also opened lower, at 3.07 percent.
- The markets were unable to find their footing last week, as all three major U.S. indices declined by more than 5.5 percent. News that Cambridge Analytica, a political data firm, accessed the private information of more than 50 million Facebook users led to a sharp sell-off in Facebook stock. The stock’s significant weighting in the S&P 500 Index (it’s the fourth largest) and broad social media data concerns weighed heavily on the technology sector.
- Tariffs continued to grab headlines last week, as President Trump announced between $50 and $60 billion in trade tariffs on China. China’s response was swift, as the country announced its own tariffs of approximately $3 billion on U.S. steel, aluminum, pork, fruit, and wine. The actions led to concerns of a full-fledged trade war between the U.S. and China. On a positive note, the number of countries exempt from the U.S.’s proposed steel and aluminum tariffs has continued to grow. This trend will be one to monitor, as it provides an indication of the legitimacy of the proposed tariffs.
- Last week was a busy one for economic data. On Wednesday, existing home sales increased by more than expected in February, gaining 3 percent on a month-over-month basis. This increase was welcome, following declines in December and January.
- Also on Wednesday, the Federal Open Market Committee raised the upper limit of the federal funds rate from 1.50 percent to 1.75 percent. This was the first rate hike under new Chair Jerome Powell. Economists expect two to three more hikes this year.
- Finally, on Friday, February durable goods orders beat expectations, rising 3.1 percent against expectations for a 1.6-percent gain. This was a positive surprise, as business investment slowed in December and January. Given the high level of business confidence, this growth was welcome.
|MSCI Emerging Markets||–3.35%||–1.82%||1.48%||24.23%|
|Fixed Income Index||Month-to-Date||Year-to-Date||12-Month|
|U.S. Broad Market||0.12%||–1.97%||0.74%|
What to look forward to
There are only two major economic reports this week, but each will give us a look at the all-important consumer.
On Tuesday, the Conference Board will release its Consumer Confidence Index. The index is expected to rise from 130.8 in February to 131 in March, as the effects of the tax cuts continue to show up in paychecks. Although recent stock market turbulence may weaken confidence eventually, this survey was taken before last week’s declines, so it should not be affected. If the number comes in as expected, this would be a positive signal for the economy.
On Thursday, the personal income and spending report will be released. Personal income growth is expected to remain steady at a strong 0.4 percent for February, supported by continued employment growth and slow but steady wage growth. Personal spending growth is expected to tick down from 0.2 percent in January to 0.1 percent for February. Any decline would be due to a weather-related drop in utilities spending and a decline in gas prices, making this number better than it seems.