June 20th – Weekly Update

  • Stock prices skidded for a second week as inflation expectations slipped and Brexit worries mounted. Low yields in Germany, Japan and the U.K. continued to push investors into the U.S. markets, driving the ten-year U.S. Treasury yield beneath last week’s three-year low. Oil prices fell but mostly recovered by Friday as the U.S. dollar slid. Gold prices continued to gain.
  • Brexit hung over central-bank debates this week, with the bank of England (BoE) warning that a withdrawal from the European Union would materially impact growth and inflation, and would likely cause sterling to fall sharply. The BoE held policy steady.
  • As expected, the FOMC left policy unchanged, noting in its statement the slower pace of improvement in the U.S. labor market as well as global uncertainties such as Brexit.
  • The Bank of Japan also left policy unchanged. Its statement maintained that moderate recovery continued but noted headwinds from a slowdown in emerging economies.
  • U.S. retail sales increased 0.5% in May, led by higher spending online and at gas stations. Overall sales grew 2.5% compared to a year earlier.
  • Aggregate U.S. housing starts fell 0.3% in May. Starts on single-family homes, about two-thirds of new construction, rose 0.3%. Apartments and condominiums shrank 1.2%.
  • Building permits, an indicator of future construction, increased 0.7% to 1.14 million, from a revised 1.13 million in April.
  • The New York and Philadelphia manufacturing surveys showed modest headline improvements in June. New orders and shipments turned positive in New York but remained negative in Philadelphia. Manufacturers in both regions, however, expected growth over the next six months.
  • Industrial production decreased 0.4% in May after rising 0.6% in April. Declines in manufacturing and utilities were slightly offset by a small gain for mining.
  • The outlook for the euro zone got a boost from upbeat data releases. Industrial production rose 1.1% in April after a two month decline. Employment increased by 0.3% in 1Q16 over 4Q15. Annual inflation was -0.1 % in May, up from – 0.2 % in April.
  • Industrial production in Japan rose 0.5% in April, from 0.3% in March. Analysts had expected a 0.4% increase.

CPWM Weekly Market Monitor (2016.06.20)