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Week in Review 9.6.2019
September 9, 2019
Week in Review
Week Ending: Friday, September 6, 2019
Recap & Commentary
In a response to slowing conditions, China’s central bank cut the reserve ratio for banks by 0.5%. The move marked the seventh cut since 2018, and largest during the current easing cycle. The move will provide ~$126B to help stimulate the economy. Whether or not the increase in liquidity actually spurs economic growth remains to be seen. Much like in the U.S., trade-related uncertainty, not access to capital, currently appears to be the largest hindrance to growth.
Speaking at a conference in Switzerland, Fed Chair Jay Powell stated that the most likely outlook for both the U.S. and global economy is continued moderate growth. However, he indicated that the central bank is monitoring “significant risks” and will “act as appropriate to sustain this expansion.” Market expectations for another 0.25% rate cut at the Fed’s September meeting currently stand at 90%.
Economic Bullet Points
US Manufacturing — ISM and PMI manufacturing index data softened in August. Notably, the ISM measure fell below 50 for the first time since 2016, driven by a sharp contraction in new export orders. Given the broad weakness throughout the reports, a September interest rate-cut will likely come to pass.
Factory Orders rose 1.4% in July, the most in a year, and above the consensus of 1.0%. Despite the July increase, factory orders have declined -0.9% y/y, the most since October 2016, and in-line with the broader manufacturing slowdown.
International Trade — The US trade deficit narrowed by $1.5 billion in July to -$54 billion as a gain in exports outweighed a decline in imports. The report, however, does not reflect the most recent US-China trade war escalation.
Of Note
Market Indices Week of 9/6
S&P 500 | 1.8% |
Small Caps | 1.0% |
Intl. Developed | 1.7% |
Intl. Emerging | 1.9% |
Commodities | 1.1% |
U.S. Bond Market | -0.3% |
10-Year Treas. Yield | 1.55% |
US Dollar | -0.5% |
WTI Oil ($/bl) | $57 |
Gold ($/oz) | $1,507 |
The Week Ahead
- Inflation (CPI / PPI)
- Retail Sales
- Consumer Credit
- NFIB Small Biz Optimism
- Consumer Sentiment
- Jobless Claims
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