June 26th – Weekly Update

  • Oil lost ground during the week as gold and U.S. equites experienced modest gains. The S&P 500 was up for the second consecutive week with the Nasdaq and Dow Jones both also rising. The 10-year U.S. Treasury yield closed at approximately 2.14%.
  • Oil came under pressure during the period with prices hitting their lowest levels since mid-November. However, there was nothing specific behind the latest weakness. Commentary focused on the usual suspects, including the persistent global inventory glut and rising production from Nigeria and Libya.
  • Fedspeak included St Louis Federal Reserve (Fed) President James Bullard commenting that current data readings suggest the Fed can wait and see how the economy develops before making any further adjustments to rates. He noted that the U.S. economy remains in a low-growth, low-inflation environment for which the current level of the policy rate may be appropriate over the forecast horizon.
  • New York Fed President William Dudley stated that the current economic expansion has a long way to go and, like Fed Chair Janet Yellen, expressed confidence that inflation will soon get back to the central bank’s 2% target. He added that halting the Fed’s tightening cycle could imperil the economy and potentially cause a recession.
  • Existing-home sales for May rose 1.1% month-over-month to at 5.62M seasonally adjusted annual rate (SAAR), better than April’s 5.57M reading and consensus for 5.54M.
  • The U.S. flash manufacturing purchasing manager’s index (PMI) fell to 52.1 in June from 52.7 in the May’s final reading, this was below the 53.0 consensus and the lowest level in nine months. The release noted the weaker reading was largely a function of softer rates of output and new business growth, which more than offset stronger contributions from job creation and inventories.
  • The U.S. flash services PMI fell to 53.0 in June from 53.6 in May, which was also the consensus. It was the lowest reading in three months. The release highlighted a robust and accelerated increase in new orders (the strongest since January) which helped drive a further pickup in job creation following the recent April low.

CPWM Weekly Market Monitor (2017.06.26)