U.S. and World News
- China’s central bank continued its easing measures as it cut its benchmark lending rates by 0.25%, down to 5.1%. The one-year benchmark deposit rate was also cut by 0.25%, down to 2.25%. This was the third reduction of rates since November. As economic growth cools to levels not seen since the global financial crisis, China’s central bank has been quite active in an effort to avoid a ‘hard landing’ for their economy.
- This week, the Senate voted to hold a debate on a bill that would give President Obama the ability to ‘fast-track’ trade deals such as the proposed Trans-Pacific Partnership (TPP). The measure does still face much opposition in the House due to concerns about currency manipulation, the freedom it gives to presidents and the potential effect on American jobs. The TPP would create a free trade zone covering 40% of the world economy, linking the U.S. with many Asia-Pacific countries including Japan, Malaysia and Singapore. Conclusion of the agreement has been held up for months as the political process in the U.S. has dragged somewhat expectedly, but if it is finalized in its current form, the TPP would be the biggest trade deal since NAFTA.
- In another choppy week, equity markets ended up in positive territory. The S&P 500 gained 0.37%, closing at a New All-Time High of 2,123. Meanwhile, the Dow Jones increased by 0.52% and closed at 18,272. Year to date, the S&P is up 3.88% and the Dow is up 3.44%.
- Yields in the Treasury market were quite volatile this week but ended mostly unchanged. The 10 year Treasury bond now yields 2.15% and the 5 year Treasury bond yields 1.47%.
- The spot price of WTI Crude Oil rose this week, gaining 0.79% and closing at $59.86 per barrel. In 2015, WTI Oil prices are now up 7.57%.
- The spot price of Gold rose by 3.05% this week and closed at $1,224.63 per ounce. Year to date, gold prices are up 3.40%.
- Initial jobless claims dropped a bit from last week and remain quite low, coming in at 264,000, below consensus expectations of 273,000. The Labor Department noted that no special factors affected claims this week. The four week moving average for claims now stands at 271,750, the lowest it’s been since April 2000.
- Headline retail sales were flat in April, disappointing against estimates of 0.2% growth. Some of the weak areas were auto sales (-0.4%), electronics (-0.4%) and furniture (-0.9%).
Fact of the Week
- Legendary money manager and touted ‘Bond King’ Bill Gross wrote an article for the 11/26/2012 issue of Time magazine entitled, “Why Stocks are Dead” in which he provided his gloomy long term stock market forecast. From the date the article was published through the close on Friday, the S&P 500 has had a 58.95% total return, or 20.68% annualized.
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