May 29th – Weekly Update

  • On Memorial Day we honor those in the military who made the ultimate sacrifice for America.
  • U.S stocks rallied strongly on the week, bouncing back from last week’s wavering. Asian and European stocks gained slightly, as did gold. Oil sold off after an OPEC meeting produced no breakthrough to reduce oversupply, but then rallied for a solid gain. The yield on the 10-year U.S. Treasury increased slightly, ending the week at 2.25%.
  • Q1 GDP was revised up to a 1.2% annual rate from the 0.7% advance estimate, better than expected. Nonresidential fixed investment and personal consumption expenditures increased more than previously estimated.
  • U.S. durable goods orders disappointed in April, declining 0.7% versus a March gain of 2.3% but better than an expected 1.5% contraction.
  • The University of Michigan’s final reading of May consumer sentiment was 97.1, up slightly versus April’s final reading. The index has risen 2.5% since May 2016.
  • Inflation expectations, which the Federal Reserve closely monitors, were little changed between April and May. While one-year expectations rose in May to 2.6%, up from 2.5% the month before, five-year inflation expectations held steady at 2.4%.
  • The U.S. Census Bureau and the Department of Housing and Urban Development reported that new home sales rose to a seasonally adjusted annual rate of 569,000 in April, which was significantly below the March rate of 642,000 but slightly above April 2016. The median home price fell 3% as supply rose.
  • The U.S. Composite PMI Output Index measured a modest rebound of business activity growth in May, pointing to the strongest upturn in U.S. private sector output since February.
  • The minutes of the Federal Open Market Committee’s (FOMC) May meeting showed Fed officials expected that it would “soon be appropriate” to raise short-term interest rates. Markets have interpreted this to mean the Fed will make its next move in June, likely with another move later in the year.
  • The FOMC minutes further revealed the Fed is moving toward a consensus on how to start shrinking its holdings of Treasury and mortgage securities. Under the approach discussed, later this year the Committee would allow gradually increasing amounts of those securities to mature without reinvesting the proceeds.

CPWM Weekly Market Monitor (2017.05.29)