U.S. and World News
- In a speech at the Economic Club of New York, Fed Chair Janet Yellen emphasized downside risks to the U.S. economic outlook which derive from slower global growth. On inflation, Yellen acknowledged the recent uptick in core prices but said it is “too early to tell if this recent faster pace will prove durable.” The dovish comments follow the decision earlier in the month by the Fed to leave interest rates unchanged and lower its forecasts for future hikes.
- The European Union will start implementing its controversial plan for asylum seekers on Monday by transferring the first group of migrants back to Turkey. Under the deal, EU countries have pledged to take in one screened refugee directly from Turkish soil for each Syrian refugee returned to Turkey. In addition, Turkey will receive nearly $7 billion and other concessions to help the country stem the migrant tide and deal with the 2.7 million Syrians currently living in the country.
- Markets resumed their rally and finished the 1st quarter on a positive note. The S&P 500 gained 1.84% and closed at 2,073. Likewise, the Dow Jones rose 1.58% and closed at 17,793. So far in 2016, the S&P is up 1.95% and the Dow is up 2.76%.
- Interest rates moved down this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.78%, respectively.
- The spot price of WTI Crude Oil fell 7.05% this week to close at $36.68 per barrel. WTI Crude is down 8.25% in 2016.
- The spot price of Gold increased 0.40% this week, closing at $1,221.95 per ounce. Year to date, gold prices are up 15.16%.
- Initial jobless claims came in at 276,000 which was an increase from last week’s reading of 265,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
- The monthly non-farm payrolls report showed 215,000 jobs added in March, beating estimates of 205,000. With only modest backward revisions, the three month average for job gains now stands at 209,000.
- Despite the strong job gains, the headline unemployment rate ticked up 0.1% to 5.0% which was higher than expected. This was mostly due to a 0.1% increase in the labor force participation rate which now stands at 63.0%. The participation rate has now risen 0.6% since September.
- Average hourly earnings rose 0.3%, more than the expected 0.2%. Wage growth over the last 12 months now stands at 2.3%.
- The Case-Shiller Home Price Index rose 0.8% in January, better than expectations of 0.7%. All 20 cities in the index showed gains in home prices for the month. Over the last 12 months, home prices as measured by the index have risen 5.8%.
- The headline PCE Index (measure of inflation) declined by -0.1% in February, in line with expectations. Headline prices have only risen by 1.0% over the last year, being dragged down by slumping energy prices.
- The Core PCE Index (excludes food and energy, Fed’s preferred measure of inflation) was up 0.15%, slightly below estimates of 0.2%. Over the last year, core prices have risen 1.7%, lower than the forecast of 1.8% and the Fed’s target of 2.0%.
Fact of the Week
- According to the Social Security Administration, 35% of American men and 40% of American women elect to take their Social Security retirement benefits at age 62, the earliest age a worker can access those benefits. Those who do take benefits at 62 are taking a permanent 25% discount to what the benefit would be at full retirement age.
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