July 10th – Weekly Update

  • U.S. equities bumped up during the holiday week with the S&P 500, Nasdaq and Dow Jones all posting slight gains. Oil and gold both lost ground. The 10-year U.S. Treasury yield closed at approximately 2.38%.
  • Federal Open Market Committee (FOMC) chair Janet Yellen commented during the period that even though the unemployment rate is below the perceived natural rate, inflation has continued to run below the FOMC’s objective. She reiterated her position that it is appropriate to hike rates gradually.
  • The June jobs report cited an increase in nonfarm payrolls of 222K, beating consensus expectations for a 178K gain. Net revision to the two prior months was a positive 47K. Private employment increased by 187K, better than the 170K consensus. Government payrolls rose by 35K, the most in nearly a year. The unemployment rate unexpectedly ticked up to 4.4% from May’s 16-year low of 4.3%, however, the labor participation rate improved to 62.8% from 62.7%.
  • The June consumer confidence index came in at 118.9, better than May’s 117.6 level and ahead of consensus for 116.0. The present situation index increased from 140.6 to 146.3, its highest level since 2001.
  • Personal consumption rose 0.1% month-to-month in May, weaker than April’s 0.4% rise and the lowest gain since February. Personal income rose 0.4% in May, an improvement from April’s downwardly revised 0.3% rise (had been 0.4%) and ahead of consensus for 0.3%.
  • The percentage of consumers saying business conditions are “good” rose to 30.8% from 29.8% in the prior report. The expectations index, however, ticked down to 100.6 in June vs. May’s 102.3 reading.
  • Core capital goods shipments (which feed into GDP) fell 0.2% after an unchanged 0.1% gain in April. Consensus was for a 0.3% increase. The miss comes amid the negative surprise momentum regarding the U.S. economic calendar and concerns about a softer-than-expected rebound in Q2 growth.
  • Headline durable goods orders were down 1.1% month-to-month in May, worse than expectations for a 0.6% drop and the biggest drop in six months. April’s results were negatively revised with durable goods orders down 0.9% vs. a previously reported 0.8% decline.

CPWM Weekly Market Monitor (2017.07.10)