Commentary Weekly Market Update As of November 22, 2013 The Economy • Economic reports showed inflation remaining tame, consumer spending holding up and housing still taking a breather after its strong run. Production surveys were mixed. Overseas reports were mixed but generally confirmed that the global economy continues to experience very sluggish growth. • The Organization for Economic Cooperation and Development (OECD) revised its global economic forecast for 2014 down significantly while predicting that growth will pick up in 2015. The OECD opined that fiscal brinkmanship within the U.S. government “remains a key risk” to the global economy. • Retail sales rose more than expected in October, according to initial estimates from the Commerce Department. While September’s initial figures were revised down slightly, the American consumer continues to hold up well. • Consumer prices were down slightly in October due to falling fuel prices. The less volatile core measure, which excludes food and energy prices, was up slightly but by less than the consensus forecast. • Producer prices exhibited a similar trend in October, with lower energy prices driving headline inflation into negative territory. • The Kansas City Fed’s Manufacturing Index for November was better than expected, showing growth in Midwest manufacturing. • After falling to a 12-month low in October, Markit’s Purchasing Managers’ Index for U.S. manufacturing rose to an eight-month high in November. Both domestic and export new orders rose at a faster rate, which bodes well for global activity. • The Philadelphia Fed’s survey of general business conditions was not as promising, coming in well below October’s figure and consensus expectations. • Labor-cost growth remained subdued in the third quarter, according to the Department of Labor. This provides further evidence that inflation pressures are not an immediate concern. • The Labor Department reported that job openings rose slightly in September, coming in near the upper end of consensus. • The National Association of Realtors reported that existing home sales came in near the low end of expectations in October, declining 3.2% from September. They were still up from a year ago, and the median sales price was higher, thanks to still constrained inventories. • After reaching a recovery high in August, homebuilder sentiment continued to level off in November, according to the National Association of Home Builders. Current sales and the six-month outlook were strong, but buyer traffic has been weak of late. • The Bank of Englands Monetary Policy Committee voted unanimously not to expand its bond purchase program and to keep its interest rate target at 0.5%, given low inflation and concerns about the durability of the U.K.’s current recovery. • The composite PMI for the entire eurozone remained in growth territory (barely) but fell to a three-month low; however, manufacturing reached its best level in over two years. Economic Calendar • 11/25: Pending Home Sales • 11/26: Housing Starts, Consumer Confidence • 11/27: Jobless Claims, Durable Goods, Consumer Sentiment • 11/28: Happy Thanksgiving! Stocks • Global equity markets rose for the week. • In the U.S., growth stocks beat value stocks and large-company stocks outperformed small-company stocks. All sectors were positive. Materials and Consumer Discretionary outperformed, while Utilities and Telecommunications underperformed. Bonds • Global bond markets were flat on the week. High-yield bonds outperformed. Corporate bonds were slightly positive, and global government bonds fell. • Treasurys firmed up following the Senate Banking Committee meeting, where Fed Chair nominee Janet Yellen provided testimony.
Posted on: Mon, 25 Nov 2013 16:04:29 +0000
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