U.S. and World News
- Minutes from the September Federal Reserve meeting showed growing support for a rate hike. Several voting members stated that they were anticipating an increase “relatively soon.” However, the committee remains divided as some members thought that there remains some slack in the labor market and think it appropriate to wait for more evidence that the economy was progressing toward the committee’s goals while other members believed the economy was at or near full employment and delaying a rate hike would jeopardize the Fed’s credibility. The Fed will be meeting next in November and then again in December. However, the odds of a November hike remain low due to the meeting being held just before the U.S. election, making the December meeting the primary focus for investors.
- This week the S&P 500 dipped 0.95% and closed at 2,133. The Dow Jones fell 0.56% and closed at 18,138. So far in 2016, the S&P is up 6.09% and the Dow is up 6.19%.
- Interest rates continued to climb higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.29% and 1.80%, respectively.
- The spot price of WTI Crude Oil was up 1.04% this week to close at $49.63 per barrel. WTI Crude is up 25.67% in 2016.
- The spot price of Gold declined 0.41% this week, closing at $1,251.98 per ounce. Year to date, gold prices are up 18.00%.
- Initial jobless claims came in at 246,000, down from last week’s reading of 249,000. The Labor Department noted that claims may have been distorted by the effects of Hurricane Matthew which led to closures of filing offices in affected regions. The four week moving average for claims moved down to 249,000.
- Retail sales increased by 0.6% in September which was in line with expectations. Sales were boosted by higher gas station sales during the month. However, core retail sales (excludes autos, gas and building materials) were weaker than expected, rising 0.1% against expectations for a 0.4% increase. For the 3rd quarter, core retail sales growth slowed, rising 1.1% on an annualized basis, coming down from a 6.7% pace in the 2nd quarter.
- The University of Michigan’s consumer sentiment index showed a preliminary October reading of 87.9 which is a decline from last month’s figure and below expectations of 91.8. The report was mixed as consumers’ future expectations fell but consumers’ assessment of their current economic conditions improved.
Fact of the Week
- As of June 30, the total US bond market, which includes treasury, municipal, corporate, mortgage and asset-back debt, was worth $40.7 trillion. This amount has more than tripled over the last 20 years as the bond market was worth $12.4 trillion as of 12/31/96. (Source: Securities Industry and Financial Markets Association)
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