Wealth Management Economic Update March 14, 2016

U.S. and World News

  • European Central Bank President Mario Draghi announced additional easing this week in an effort to spur growth in the still struggling European Union. Draghi announced several cuts to interest rates, including lowering the deposit rate further into negative territory to -0.4% from -0.3%. Additionally, the ECB announced that its Asset Purchase Program would be extended until at least March 2017, that the amount of bonds purchased each month would be increased from €60 billion to €80 billion and that corporate bonds would now be part of the purchases. Markets reacted favorably initially following the announcement, however they fell back when during his post-meeting press conference, Draghi indicated that interest rates were unlikely to fall further.
  • north-korea_320Tensions continue to escalate in North Korea as leader Kim Jong-un has ordered his country’s scientists to conduct more nuclear tests and urged them to boost the nation’s nuclear attack capability. Further unconfirmed reports from Pyongang have the country in possession of miniaturized nuclear warheads to mount on ballistic missiles. North Korea has also threatened military steps against South Korea in addition to firing short-range ballistic missiles off its eastern coast.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 1.16% and closed at 2,022. Likewise, the Dow Jones rose 1.31% and closed at 17,213. So far in 2016, the S&P is down 0.60% and the Dow is down 0.57%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.50% and 1.99%, respectively.
  • The spot price of WTI Crude Oil gained 7.10% this week to close at $38.47 per barrel. WTI Crude has fallen 1.69% in 2016.
  • The spot price of Gold decreased 0.76% this week, closing at $1,249.45 per ounce. Year to date, gold prices are up 17.75%.

Economic Data

  • Initial jobless claims came in at 259,000 which was a decrease from last week’s reading of 278,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 267,500.

Fact of the Week

  • The cost of tuition, fees, room and board at an average in-state public college has increased 5.6% per year over the last 30 years, bringing those costs to $19,548 for the 2015-2016 school year. Had these costs only risen by the rate of inflation (as measured by the Consumer Price Index) over the last 30 years (2.7% per year), then a year of college would cost $8,515 for the current year. (Sources: College Board, Department of Labor)

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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