U.S. and World News
- OPEC ministers met in Vienna, Austria this week to discuss the state of the world’s oil markets. The cartel of the largest oil producers failed to reach an agreement on setting output targets, a result that was widely expected. Saudi Arabia remains a supporter for setting output targets among the member nations; however, Iran is strongly against it as the country recently had restrictions lifted that allowed their re-entry into the oil markets.
- As expected, the European Central Bank did not announce any new easing measures during its conference this week. The ECB has already increased stimulus twice since December, so the committee opted to hold off on any new measures for now. The previously announced step of the central bank purchasing corporate bonds is slated to begin next week.
- Japanese Prime Minister Shinzo Abe announced the postponement of increasing the country’s sales tax from 8% to 10% amid continued tepid economic growth. The tax increase will be delayed for a second time until 2019 and marks a big reversal in Abe’s stance on the matter as he had repeatedly said that only an economic shock on the scale of the Lehman Brothers collapse or a major earthquake would cause another delay. Abe also said that he will announce a new stimulus package in the fall, further complicating Japan’s efforts to reign in the largest debt burden in the world and has led some economists to become concerned that Japan’s debt rating may be downgraded.
- Equity markets were mostly flat during this holiday shortened week. The S&P 500 was Unchanged for the week and closed at 2099. The Dow Jones dipped 0.30% and closed at 17,807. So far in 2016, the S&P is up 3.65% and the Dow is up 3.42%.
- Interest rates moved sharply lower on the weaker than expected jobs report, pushing back expectations of the Federal Reserve increasing interest rates. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.70%, respectively.
- The spot price of WTI Crude Oil lost 1.11% this week to close at $48.78 per barrel. WTI Crude is up 18.03% in 2016.
- The spot price of Gold gained 2.67% this week, closing at $1,244.69 per ounce. Year to date, gold prices are up 17.30%.
- Initial jobless claims came in at 267,000 which was a decrease from last week’s reading of 268,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 277,000.
- The May non-farm employment report showed a weak 38,000 jobs added during the month, well below estimates of 160,000. Some of the miss in the figure can be attributed to the 37,000 job decline in the telecommunications industry due to a major strike at Verizon. However, the weakness spread further than that category. The prior two months’ figures were revised down a total of 59,000, making the three month average for job gains 116,000.
- The headline unemployment rate declined from 5.0% to 4.7%, a larger decline than the estimated 4.9%. However, most of this improvement in the headline figure was due to a 0.2% decrease in the labor force participation rate to 62.6%.
- Average hourly earnings increased by 0.2%, bringing the 12-month increase in wages to 2.5%.
- The Case-Shiller home price index rose 0.9% in March, slightly beating estimates of 0.8%. Only 1 of the 20 cities making up the index saw price declines during the month. Over the last 12 months, home prices as measured by the index have risen 5.4%.
- The headline PCE (measure of inflation), rose by 0.3% during April, reflecting a rise in energy costs. Meanwhile, Core PCE (excludes food & energy, preferred measure of inflation by the Federal Reserve) was a bit weaker, gaining 0.17%. Over the last 12 months, headline prices measured by PCE have risen 1.1%, while core prices have risen 1.6%.
Fact of the Week
- Per a poll by Gallup, only 68% of Americans at least age 65 and 44% of all American adults have executed a will or trust.
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