U.S. and World News
- The Federal Reserve increased the federal funds rate by 0.25% to a target range of 1%-1.25% at its June meeting this week and signaled that there would be one more increase this year. While this move was widely expected, markets were more focused on the details regarding reduction of the balance sheet. The Fed indicated that they will begin shrinking the balance sheet and that each quarter going forward; they will allow higher amounts of securities to roll off the balance sheet without reinvestment.
- The International Energy Agency stated that the conflict between a handful of Middle East countries and Qatar regarding accusations that Qatar is in support of Islamist militants is causing “logistical headaches”. Saudi Arabia, Egypt, Bahrain, and the UAE have officially stopped working with Qatar and the UAE has banned oil tankers linked to Qatar. Egyptian finance minister Amr El-Garhy is not concerned about the possibility of financial repercussions resulting from the conflict and stated “It’s not a matter of a loss of money… it’s a matter of principle.”
- Markets ended the week slightly higher. The S&P 500 rose by 0.12% and closed at 2,433. The Dow Jones increased by 0.33% for the week and closed at a New All Time High of 21,384. Year to date, the S&P is up 9.70% and the Dow is up 9.47%.
- Interest rates fell this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.74% and 2.15%, respectively
- The spot price of WTI Crude Oil slid 2.40% this week, closing at $44.73 per barrel. Year to date, Oil prices have fallen 16.73%
- The spot price of Gold ended the week lower, closing at $1,254.14 per ounce. Year to date, Gold prices are up 9.29%.
- Initial jobless claims decreased by 8,000 from last week, coming in at 237,000. The decline was largely attributed to California and other energy producing states. The four week moving average for claims moved up to 243,000.
- The Consumer Price Index (CPI) decreased by 0.13% in May and the year-over-year rate fell 0.3% and came in at 1.9%. The decline was led by the drop in energy prices during the month.
- Retail sales were down for the month declining by 0.3% versus expectations of no change.
Core retail sales (ex-autos, gasoline and building materials) were unchanged versus expectations of a 0.3% gain. Core April sales were revised up 0.5% which more than offset the miss for last month.
- Housing starts fell by 5.5% in May to 1092k, which was below expectations. The decline was led by both multifamily and single-family homes in the Midwest and Southern regions.
- The University of Michigan’s consumer sentiment index declined by 2.6 points to 94.5 in the preliminary June report. The drop marks a seven month low, but still remains a relatively high level.
Fact of the Week
- The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)
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