June 5th – Weekly Update

  • Stocks close at all time highs demonstrating resilience in the face of incessant political drama. Oil prices slid, giving back much of last week’s gains; gold was up modestly. The yield on the 10-year U.S. Treasury note fell to about 2.16% on soft hiring news.
  • Nonfarm payrolls reported 138,000 new jobs in May, below expectations, even as unemployment reached a 16-year low of 4.3% and underemployment dropped to 8.4% from 8.6% in April. Hourly earnings came in at 2.5%, undershooting expectations by 0.1%.
  • U.S. consumer spending accelerated 0.4% in April compared to March, the fastest pace in four months, indicating that the U.S. economy is rebounding after a slow first quarter. Personal income rose 0.4% in April. The personal saving rate held steady in April at 5.3%.
  • The U.S. trade deficit increased by 5.2% in April, to $47.6 billion, more than economists’ expectations of $46.2 billion. Imports rose 0.8% while exports fell 0.3%. The strong U.S. dollar was cited as a cause of the increase.
  • The closely watched ISM index of U.S. manufacturing activity inched up to 54.9 in May from 54.8 in April. A reading above 50 indicates expansion. Readings for each month of 2017 have been higher than any monthly readings in the past two years.
  • Eurozone annual inflation fell from 1.9% in April to 1.4% in May, more sharply than expected. The disappointment came despite a drop in the jobless rate to a seven-year low. The two reports are likely to make the European Central Bank more reluctant to quickly unwind its stimulus programs.
  • The European Commission’s Economic Sentiment Indicator fell to 109.2 in May from 109.7 in April. Economists had expected business confidence to rise to 110.0 after centrist Emmanuel Macron defeated anti-euro candidate Marine Le Pen in France’s presidential elections.
  • China’s official manufacturing PMI registered 51.2 in May, unchanged from April. The index, considered a gauge of business sentiment, has remained in expansion territory for 10 consecutive months. Economists said the May figure points to an economy slowing less rapidly than expected.

CPWM Weekly Market Monitor (2017.06.05)