Week in Review 9.13.2019

September 16, 2019

Week in Review

Week Ending: Friday, September 13, 2019

Recap & Commentary

Markets drifted higher over the course of the week, supported by improved sentiment surrounding U.S./China trade tensions. Consumer data that was largely inline to slightly better-than-expected also helped.Improving investor sentiment led to a selloff in bonds and a corresponding increase in rates. The 10-year Treasury yield ended the week at 1.90%, up from its three-year low of 1.43% earlier in the month. That had the effect of reversing the recent inversion between the 2-Year and 10-Year yields. At Friday’s close, the spread between the two yields had recovered to 0.09%, the highest level in a month.

Over the course of the week, both the U.S. and China announced delays of certain tariffs. The conciliatory gestures, which were welcomed by markets, came ahead of face-to-face talks scheduled for October. As a reminder of the potential impact the current trade war poses to the global economy, the IMF released a revised forecast saying that current and proposed tariffs between the U.S. and China could reduce global GDP growth in 2020 by -0.8%.

Faced with falling inflation, and slowing economic growth, the European Central Bank (ECB) lowered its key deposit rate further into negative territory and announced a new round of quantitative easing in which the central bank will purchase €20B of bonds/month, beginning in November. Outgoing ECB President Mario Draghi said the bank will continue the purchases for “as long as necessary.”

Economic Bullet Points

Inflation — Headline CPI ticked up an expected 0.1% in August, while core CPI (ex. food and energy) rose a higher-than-expected 0.3%. Y/Y, CPI has held steady at 1.7%, but core CPI spiked to 2.4%, the fastest pace since September 2008. Despite the increase in core prices, the report does not change the outlook for Fed policy. The market still expects a 25-50 bps rate cut this month. The PPI report (business inflation) was mixed in August, but overall, prices were stable.Retail Sales increased by 0.4% in August, double the consensus. So far in Q3, sales are up an average 0.6% per month, which is better than the 0.4% average gain in Q2. Also, Control Group Sales, a more stable measure that serves as a proxy for consumer spending in the GDP report, increased 0.3% in August.

Consumer Credit came in sharply above expectations in July, up $23.3 billion. Revolving credit (credit cards), rose $10.0 billion after falling $0.2 billion last month, while non-revolving credit (student and auto loans) rose $13.3 billion versus June’s $14.7 billion. Positive sentiment continues to support spending.

Jobless Claims for unemployment insurance dropped 15,000 last week, the most in four months, to 204,000, well below the consensus of 219,000. The reading was likely distorted by the Labor Day holiday. Still, the four-week average of claims fell 4,250 to 212,500, hovering near its lowest level since 1969.

Of Note

The U.S. budget deficit topped $1 trillion in the first 11 months of the fiscal year, the first time it has exceeded that amount since 2012. Through August, the deficit increased by $169B or 19% vs. a year ago.
[siteorigin_widget class=”Simple_Button”][/siteorigin_widget]

Market Indices Week of 9/13

S&P 500 1.0%
Small Caps 4.8%
Intl. Developed 1.2%
Intl. Emerging 1.4%
Commodities 1.0%
U.S. Bond Market -1.1%
10-Year Treas. Yield 1.90%
US Dollar -0.2%
WTI Oil ($/bl) $55
Gold ($/oz) $1,489

The Week Ahead

  • Leading Indicators
  • Housing Data
  • Industrial Production
  • Jobless Claims

First Western Trust

1900 16th St., Suite 1200 Denver, CO 80202
Phone: 303-531-8100
Website: www.myfw.com

Colorado: Aspen | Boulder | Cherry Creek | Denver | Denver Tech. Center | Ft. Collins

Arizona: Phoenix | Scottsdale

Los Angeles, CA: Century City

Wyoming: Jackson Hole | Laramie

Insights

The IRS Announces 3 Key Changes to 401(k) Plans for 2025: How to Maximize Your Retirement Savings

The IRS has recently unveiled important changes to 401(k) plans for 2025, offering new opportunities for workers to boost their […]

Learn more

Tax-Efficient Retirement Planning: Strategies to Optimize Your Wealth in Retirement

When planning for retirement, maximizing wealth and managing tax burdens are essential to ensure your hard-earned savings work for you. […]

Learn more

Week in Review: December 23, 2024

Recap & Commentary Markets ended the week lower, reacting poorly to revised Federal Reserve guidance following the bank’s December FOMC […]

Learn more

Understanding Risk Tolerance: How to Align Your Investments with Your Financial Goals

For high-net-worth individuals, effective wealth management goes beyond maximizing returns. It requires aligning investments with personal risk tolerance and financial […]

Learn more

Is It Time for a Wealth Manager? Key Signs and Benefits of Professional Financial Guidance

Managing significant wealth is complex and often requires a strategic approach to ensure financial security, growth, and legacy. Hiring a […]

Learn more

Ready to learn more?
Let’s have a conversation.

Embark on a banking experience tailored to your distinct path, focused on achieving personal and business financial prosperity.