July 11th – Weekly Update

  • Strong jobs data lifted all major U.S. stock indexes at the end of the week, bringing the S&P 500 to a record high. The 10-year U.S. Treasury yield hit record lows. Brexit continued to fuel economic volatility across the world. Risk-off sentiment was in focus amid continued attention on the fallout from the “leave” vote. Rallies persisted in global government debt and other perceived safe-havens such as gold, fueling skepticism that last week’s stock gains were sustainable. Gold was slightly down following the jobs announcement, but still had risen 27% for the year. Oil prices fell for the week.
  • U.S. employers added 287,000 new jobs in June in sharp contrast to May’s disappointing number, which was revised to a substandard 11,000. The June figure was the strongest monthly gain since October. Year over year, wages rose 2.6%. The unemployment rate, calculated separately, rose from 4.7% in May to 4.9% in June.
  • Euro zone retail sales rose 0.4% in May, and 1.6% on an annual basis. The Sentix index, which measures euro zone investor confidence, rose to 9.9 in June, from 6.2 in May.
  • U.S. trade data for May came in slightly weaker than expected. The trade deficit widened to $41.1 billion from $37.4 billion in April. Exports fell 0.2%, while imports rose 1.6%.
  • U.S. factory orders contracted 1% in May after two straight gains. Durable goods orders dropped 2.3%. Following a 20.8% plunge in May, demand for mining and energy equipment went down a further 5.8%.
  • Business activity in China expanded at the fastest rate since July 2015. June’s seasonally adjusted purchasing managers’ index rose to 52.7 from 51.2 in May. Readings above 50 indicate an expansion.
  • The Bank of England cut its capital requirements for U.K. banks in attempt to manage economic Brexit tremors.
  • The Italian banking sector raised some concerns. The Italian Prime Minister said the government is willing to act unilaterally to pump €40 billion into banks if they come under severe systemic stress. Such a move would defy new euro zone banking rules.

CPWM Weekly Market Monitor (2016.07.11)