June 13th – Weekly Update

  • U.S. stocks declined for the week on uncertainty over global economic growth, central bank policy and the upcoming Brexit vote. European bourses also were in the red; Asian markets were mixed. Bonds yields in Germany, Japan and the U.K. fell to record lows, pushing investors to the United States and driving the yield on the ten-year U.S. Treasury to its lowest point in three years. Oil prices fell as the U.S. dollar strengthened; by contrast, gold prices gained.
  • The U. of Michigan’s consumer sentiment index declined to 94.3 in June from 94.7 in May, clouding the outlook for spending and economic growth. Satisfaction with current conditions reached an 11-year high thanks to wage gains, but confidence about the future slipped.
  • Job openings rose to 5.8 million in April, up from 5.7 million in March, according to JOLTS. The openings rate rose to a new post-recession high of 3.9%; the quits rate fell to 2% from 2.1% the prior month.
  • Last week’s drop in jobless claims suggested layoffs may still be low despite the hiring slowdown in May. Jobless claims touched a four-decade low in April before inching up, and have declined since spring 2009.
  • U.S. labor productivity fell at a 0.6% annual rate in 1Q16. The drop extended a slowdown that is hindering the economy’s ability to lift living standards.
  • Euro zone economic growth accelerated to 0.6% in 1Q16 after 0.3% in 4Q15. Economists attributed part of the rebound to transitory factors and said correction in the second quarter was likely.
  • Japan’s leading index increased less than expected in April, rising to 100.5 from 99.1 in March. The coincident and lagging indexes also rose.
  • Euro zone corporate bond yields fell to twelve-month lows as the European Central Bank began its purchase program. Anticipation of the program has boosted Europe’s credit markets since the ECB announced it in March.
  • China’s foreign exchange reserves shrank by $27.9 billion to $3.2 trillion in May, pressured by a rising U.S. dollar. As reserves fell, China’s high debt and low growth heightened the risk of capital outflows.

CPWM Weekly Market Monitor (2016.06.13)