Wealth Management Economic Update January 4, 2016

U.S. and World News

  • iStock_000011948408_320The Obama administration is planning to impose its first financial sanctions on Iran since the landmark nuclear agreement reached in July. This will present the first major test of whether Iran will remain committed to the deal. The penalties will target around a dozen companies and individuals who are believed to be involved in Iran’s ballistic missile program, which has conducted two test firings in recent months. It remains to be seen how Supreme Leader Khamenei will react to the U.S. sanctions, which were outlined for in the nuclear deal.
  • Debt-laden Puerto Rico will not be making two of its 13 debt payments due on January 1st, including a payment to the territory’s Infrastructure Financing Authority and to its Public Finance Corporation. The rest of the nearly $1 billion in payments will be made, including to its general obligation bondholders. In order to pay off the GO bonds, Puerto Rico was forced to raise half of the funds by clawing back revenues from other bonds.

Markets

  • Markets were down a bit to close out 2015 in a holiday shortened week. The S&P 500 fell 0.81% and closed at 2,044. Likewise, the Dow Jones dropped 0.73% closing at 17,424. In 2015, the S&P gained 1.40% and the Dow is gained 0.23%.
  • Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.28%, respectively.
  • The spot price of WTI Crude Oil fell 2.73% this week, closing at $37.06 per barrel. In 2015, Oil prices were down 38.72%.
  • The spot price of Gold decreased by 1.44% this week, closing at $1060.60 per ounce. During 2015, Gold prices fell 10.45%.

Economic Data

  • Initial jobless claims came in at 287,000 which was an increase from last week’s reading of 267,000. The Labor Department noted no special factors in the data though there may have been some effect from seasonal adjustment around the Christmas holiday. The four week moving average for claims now stands at 277,000.
  • The Case-Shiller home price index rose by 0.8% in November, beating expectations of a 0.6% increase. All 20 cities in the index saw home prices increase during the month. Over the past 12 months, home prices as measured by the index have risen 5.5%.
  • Pending home sales (track contract signings rather than closings) unexpectedly declined in November by -0.9%. Sales declined in the West (-5.5%) and Northeast (-3.0%) regions but rose modestly in the South (1.3%) and Midwest (1.0%) regions. Over the last year, pending home sales have risen by 5.1%.

Fact of the Week

  • According to the Federal Reserve Bank of New York, as of 9/30, outstanding student loan debt is $1.2 trillion. Of that, 11.6% of student debt, or $139 billion, is at least 90 days delinquent or is in default. This figure may actually understate the actual delinquency rate since loans that are currently in deferment are treated as if they are ‘current’.

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®, CFP® – (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

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

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