Weekly Market Commentary As of October 10, 2014 The Economy - The U.S. labor market showed increasing promise, as price and spending reports remained soft. Overseas, U.K. and eurozone production figures were disappointing, while housing gains provided cause for optimism. SEI anticipates continued modest global economic growth for some time. The number of job openings rose more than expected in late August from a month earlier, according to the U.S. Department of Labor. At 4.835 million, this represented the most job openings since January 2001. Initial jobless claims inched down to 287,000 for the week ending October 4, assisting the 4-week average in reaching its lowest level since February 2006. Ongoing unemployment claims, reflecting delayed data, fell for the week of September 27 to a new post-recession low. Import prices retreated 0.5% in September, less than expected, while export prices fell 0.2%, more than expected but less than in August. Year-over-year prices fell 0.9% and 0.2%, respectively. Mortgage applications rose 3.8% during the week ending October 3 following a slight decline. Refinances were stronger than purchases, although the latter still delivered a 2% increase. Consumer spending decreased in September from the prior month, according to a Gallup survey. The figure still shows an increase on a year-over-year basis. Sales are expected to increase at 4.1% during the November and December holiday shopping season, says the National Retail Federation. The projection is notably higher than the 10-year average holiday sales increase of 2.9%. Global economic growth expectations continue to fall according to the IMF’s latest World Economic Outlook. The report, which projected global economic growth at 3.3% for all of 2014 and 3.8% in 2015, has lowered 9 out of its last 12 quarterly forecasts. U.K. house prices returned to growth mode in September after holding steady during the previous month, according to Halifax. Even so, the annualized trailing quarterly increase came down. Industrial production in the U.K. was flat during August, below the prior month, but still a positive surprise given expectations for a contraction. Manufacturing output delivered a small increase. German industrial production underwent the largest monthly decline since early 2009 during August. Producers in France experienced a flat August, which exceeded expectations, while Italy actually gained during the month. Chinese purchasing managers reported slower expansion in both manufacturing and services businesses during September, according to HSBC. The Bank of Japan held firm to its near-zero interest rate, and maintained a consistent asset purchase level, in an ongoing effort to reach its inflation target. Economic Calendar October 14: Small Business Optimism October 15: Producer Prices, Retail Sales October 16: Jobless Claims, Industrialyzer October 17: Housing Starts, Consumer Sentiment Stocks Global equity markets fell for the week. In the U.S., all sectors were negative besides consumer staples. Industrials and materials lagged. Value stocks beat growth stocks and large-company stocks led small-company stocks. Bonds Global bond markets rose for the week. Global government bonds outperformed, followed by corporate bonds. High-yield bonds lagged. U.S. Treasury yields fell this week, following the release of recent Federal Open Market Committee meeting minutes detailing its above-market forecasts, low-inflation outlook and debate over balance-sheet reduction.
Posted on: Tue, 14 Oct 2014 12:59:15 +0000
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