Wealth Management Economic Update April 20, 2015

U.S. and World News

  • Greece faces an April 24th deadline to present the necessary economic reforms in order to unlock a much needed round of financial aid from Eurozone creditors. Greek finance minister Yanis Varoufakis did not rule out the possibility of a debt default if the country can’t reach a deal by the deadline. Varoufakis has now flown to Washington to have a private meeting with President Obama ahead of next week’s deadline.
  • saudi_000014768091_330Saudi Arabia announced this week that the country will open its $530 billion stock market to foreign investments on June 15th. This will give international investors their first opportunity to have direct access to the Middle East’s largest economy. In 2008, Saudi Arabia began permitting foreign investors indirect access to its market, but is now looking to fully open the market in hopes to diversify its oil dependent economy.

Markets

  • Equity markets closed the week on a down note. The S&P 500 fell 0.98%, closing at 2,081, while the Dow Jones decreased by 1.26% and closed at 17,826. Year to date, the S&P is up 1.68% and the Dow is up 0.68%.
  • Yields in the Treasury market were pushed downwards this week. The 10 year Treasury bond now yields 1.87% and the 5 year Treasury bond yields 1.31%.
  • The spot price of WTI Crude Oil continued its rise this week, climbing 8.52% and closing at $56.04 per barrel. In 2015, WTI Oil prices are now up 1.97%.
  • The spot price of Gold dipped by 0.22% this week and closed at $1,204.92 per ounce. Year to date, gold prices are up 1.74%.

Economic Data

  • Initial jobless claims rose from last week, coming in at 294,000 vs. consensus estimates of 280,000. The Labor Department noted that no special factors affected claims this week. The four week moving average for claims now stands at 282,750.
  • Headline consumer prices (measure of inflation) rose 0.2% in March, slightly lower than consensus estimates of 0.3%. Gas prices rose 3.9% in the month and food prices ticked down 0.2%. Core CPI (excludes food and energy) increased 0.2% as well, in line with expectations. Core prices have risen 1.8% in the past year, still a subdued rate from the Fed’s perspective.
  • In the 1st quarter, China grew at its slowest pace since the global financial crisis in 2009. GDP growth was measured at 7.0%, lower than the 7.3% seen in the previous quarter. The lower than expected growth number combined with recent poor retail sales and industrial output figures further builds the case for more stimulus measures in China.

Fact of the Week

  • Last month Mexico sold 100-year government bonds. This was the 3rd time since 2010 the country has sold 100-year bonds but the first time that they have been transacted in Euros (€). The bonds mature in March 2115 with a coupon rate of only 4.2%.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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