April 3rd – Weekly Update

  • Politics and Fedspeak continued to dominate headlines during the week as U.S. equities crept slightly up. After snapping an eight-session losing streak, the Dow (along with the Nasdaq and S&P 500) finished the week higher. Oil shot up during the period while gold lost some ground. The 10-year U.S. Treasury yield closed at approximately 2.39%.
  • Most of the political focus during the period continued to revolve around tax reform. A good amount of concern remains about implementation challenges following the failure to repeal/replace Obamacare.
  • Government debate surrounding contentious issues such as the border adjustment tax (BAT) continued to complicate tax reform progress. BAT is a particularly divisive proposal with winners and losers from such a tax actively lobbying in Washington.
  • Fedspeak during the period included Chicago Federal Reserve (Fed) President Evans stating that two more rate hikes this year seems appropriate and that talk of another three rate hikes does not seem necessary, given the economic fundamentals. He added that the projected effects of fiscal stimulus on the Fed’s economic forecasts were pushed out more into 2018 during the March Federal Market Open Committee (FOMC) meeting.
  • While not directly addressing monetary policy, Fed Chair Janet Yellen also made comments during the week noting that pockets of persistently high unemployment remain, despite a job market that has improved substantially since the recession. She pushed for better education and training to work towards solving the issue.
  • Consumer confidence surged to its highest reading since December 2000 with the March Consumer Confidence Index hitting 125.6, compared to 116.1 in February and versus the 114.0 consensus estimate.
  • The Case-Shiller’s Home Price Index for January rose 0.9% month-to-month, better than the 0.7% gain expected. The index hit a 31-month high and was up 5.9% year-over-year.
  • February personal income rose 0.4% month-to-month, down from January’s revised 0.5% gain but in line with consensus. Personal spending rose 0.1% month-to-month, against expectations for 0.2% (which was also January’s pace).
  • Internationally, German business sentiment hit a near six-year high while Chinese January-February industrial profits rose at the fastest pace in over five years.

CPWM Weekly Market Monitor (2017.04.03)