OPEC, Budget, Manchester: Wealth Economic Update May 29, 2017

U.S. and World News

  • oil-518901244The OPEC meeting on Thursday concluded with an agreement to extend oil production cuts for an additional nine months, however crude oil prices fell sharply on the day despite the positive result as expectations were high after OPEC displayed unusual optimism prior to the meeting. Iraq was surprisingly in support of the production cuts as they have been one of the more hesitant OPEC members to favor production cuts in the past. There still remain OPEC members that will not be required to comply with the extension cap such as Libya, Iran, and Nigeria.
  • President Trump has submitted a budget proposal that aims to cut $3.6 trillion in spending over the next ten years which includes cutting Medicaid and other social programs. The budget entails a $4.1 trillion spending allowance in 2018 which includes defense, border security, and infrastructure.
  • The U.K.’s terror threat level was raised to “critical” after an explosion following the Ariana Grande concert in Manchester, England killed 22 people and injured 59. Salman Abedi is the name of the man believed to be responsible for the attack and Prime Minister Theresa May raised the U.K. threat level to its maximum level of “critical” implying that another attack is potentially imminent.

Markets

  • Markets ended the week on a positive note. The S&P 500 rose by 1.47% and closed at 2,416. The Dow Jones gained 1.35% for the week and closed at 21,080. Year to date, the S&P is up 8.78% and the Dow is up 7.75%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.79% and 2.25%, respectively.
  • The spot price of WTI Crude Oil lost 1.74% this week, closing at $49.79 per barrel. Year to date, Oil prices have fallen 7.32%.
  • The spot price of Gold ended the week higher, closing at $1,267.14 per ounce. Year to date, Gold prices are up 10.43%.

 Economic Data

  • Initial jobless claims increased by 1,000 from last week, coming in at 234,000. Most of the increases in claims were attributed to California and Michigan. The four week moving average for claims dropped to 235,000.
  • Sales of new single-family homes fell 11.4% in April reaching a four-month low, however, new home sales in the prior three months were all revised upwards. The decline in April was largely attributed to new single-family home sales in the West.
  • Existing home sales fell 2.3% in April, but still remains at a March cycle-high. Existing sales of single-family units fell by 2.4%, while sales of condos declined by 1.6%. Existing home sales decreased in the South, West, and Northeast, but increased in the Midwest region.
    • The recent loss of momentum in the housing market and existing home sales is believed to be the negative affect from higher mortgage rates.
  • During the May Federal Open Market Committee meeting on Thursday, the Fed concluded that “it would soon be appropriate” for another rate hike. There is an 80% probability of a rate hike in June and another hike is expected in September. The Fed also noted that the weak Q1 GDP figure was likely transitory.

Fact of the Week

  • There was approximately $1.54 trillion in circulation as of April 5, 2017, of which $1.49 trillion was in Federal Reserve notes (Dollars). (Source: Board of Governors of the Federal Reserve System.)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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
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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