Fed Rate, Healthcare: Wealth Economic Update July 31, 2017

U.S. and World News

  • traffic_360The Federal Reserve left interest rates unchanged at their policy meeting this week as was expected. The post-meeting statement noted that the Committee expects to begin reducing the size of its balance sheet “relatively soon” as opposed to “this year” as had been in the June statement. This implies that there will be some sort of an announcement regarding letting maturing bonds run-off the balance sheet at the Fed’s September meeting. The market is currently pricing in a 40% chance there is another rate hike before the end of the year.
  • Following failed Senate votes to repeal and replace Obamacare, Republican senators shifted their focus to a “skinny” healthcare repeal that introduces smaller changes to the Affordable Care Act. The changes included eliminating individual and employer insurance mandates and removing the medical device tax. Despite the more limited scope of the “skinny repeal”, the bill was still struck down by a vote of 51-49 as three GOP senators voted against it. In a floor speech following the defeat, Senate Majority Leader Mitch McConnell said, “it is time to move on.”

Markets

  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Interest rates ended the week a bit higher. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.83% and 2.29%, respectively.
  • The spot price of WTI Crude Oil increased by 8.63% this week, closing at $49.72 per barrel. Year to date, Oil prices have fallen 7.45%.
  • The spot price of Gold ended the week higher by 1.14%, closing at $1,269.34 per ounce. Year to date, Gold prices are up 10.62%.

 Economic Data

  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 244,000.
  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 244,000.
  • The Case-Shiller home price index rose by 0.1% in May, lower than expectations of a 0.3% increase. Prices rose in 14 of the 20 cities surveyed with Seattle (+0.9%), Las Vegas (+0.6%) and Portland (+0.5%) showing the largest monthly increases and New York City (-0.6%), Chicago (-0.4%) and Boston (-0.4%) seeing the largest decreases. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The first estimate of 2nd quarter Real GDP showed 2.6% quarter over quarter growth, slightly below expectations of 2.7%. This first print represents an acceleration of growth over the 1st quarter’s figure of 1.4%.

Fact of the Week

  • Over the last 5 years ending June 30th, the S&P 500 has had an annualized total return of 14.6% per year. If an investor were to have missed out on the 5 best performance days in that span, the average annual return was cut by 3% to 11.6% per year. (Source: BTN Research)

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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