U.S. and World News
- Investors were forced to recalibrate their expectations this week as President Trump reversed several of his positions that he held during the campaign. Trump began by telling the Wall Street Journal that China is no longer a currency manipulator, a claim he had made many times throughout the campaign trail. He then went on to say that he respects Fed Chair Janet Yellen, leaving the door open for her to be reappointed when her term expires, despite Trump previously saying that she should be “ashamed of what she’s doing to the country.” Trump also reversed course on the Export-Import Bank, now supporting it for the backing that it lends to small companies. Finally, Trump said that NATO was no longer obsolete since it is fighting terrorism.
- Interest rates continued their recent downward trend this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.24%, respectively.
- The spot price of WTI Crude Oil rose 1.80% this week, closing at $53.18 per barrel. Year to date, Oil prices have fallen 1.01%.
- The spot price of Gold increased by 2.47% this week, closing at $1,285.50 per ounce. Year to date, Gold prices are up 12.02%.
- Initial jobless claims declined by 1,000 from last week, coming in at 234,000. The Labor Department noted no special factors affecting the data this week. The four week moving average for claims dropped to 247,000.
- The University of Michigan consumer sentiment index rose 1.1 point to 98.0 in the preliminary April report. This is approaching the cycle high of 98.5 reached in January. Both consumers’ assessment of current conditions and expectations for the future improved in the report.
- Retail Sales decreased -0.2% in March, in line with expectations. The headline retail sales figure was weighed down by lower motor vehicle & parts (-1.2%) and gasoline (-1.0%) sales. Core retail sales (excludes autos, gas, and building materials) saw a better than expected 0.5% increase.
- The Consumer Price Index (measure of inflation) declined -0.3% in March vs. forecasts of a flat CPI. The decline was due to a -3.2% drop in energy prices during the month. Over the last 12 months, headline CPI has increased 2.4%.
- Core CPI (excludes food and energy prices) declined -0.1% in March vs. expectations of a 0.2% increase. The decline was led by lower communications, apparel and lodging prices. This was the first outright decline in Core inflation since 2010. The 12 month increase in Core CPI declined to 2.0% as a result.
Fact of the Week
- Net interest costs of the federal government make up 7% of total federal outlays in 2017. It is estimated that with higher interest rates in the future and rising federal debt levels, net interest costs will be pushed to 21% of total federal spending by the year 2047. (Source: Congressional Budget Office)
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