November 20th – Weekly Update

  • The U.S. equity market was little changed at the end of the period as we enter what’s likely to be a quiet holiday week. Oil and gold both gained ground and the 10-year U.S. Treasury yield closed at approximately 2.34%.
  • Strong fundamentals continue to drive global markets despite domestic policy uncertainties and geopolitical tensions; though weakness in oil prices and skepticism about the passing of the tax bill are still weighing on market sentiment. There was minor Fedspeak during the period encompassing the strong expectation for a December rate hike and a continuation of the policy status quo when Jerome Powell takes over the chair position early next year.
  • Economic data for the week was generally positive. The Headline October Consumer Price Index (CPI) rose 0.1% month- tomonth. This was in line with consensus but slower than September’s 0.5% month-tomonth pace. Prices ex food and energy were up 0.2% month-to-month, in line with consensus and faster than the prior month’s upwardly revised 0.1% rate.
  • The Headline Producer Price Index (PPI) increased 0.4% month-to-month in October for a second straight month, ahead of consensus expectations for a 0.1% gain. This pushed the year-over-year rate of increase to 2.8% from 2.6%, the highest since February 2012. Core PPI also increased 0.4% month-to-month, ahead of consensus expectations for a 0.2% gain, with the year-over-year rate of increase coming in at 2.4%.
  • October industrial production rose 0.9% month-to-month, better than the consensus for 0.5% and ahead of September’s 0.4% gain. The release noted that activity was boosted by a return to normal operations following hurricane-suppressed production in August and September.
  • The November NAHB Housing Market Index climbed to 70, better than October’s level of 68 (which was also the consensus). The release noted that while the result is near a post-recession high, builders still face supply-side constraints such as lot and labor shortages.
  • Initial jobless claims came in at 249K, above the consensus for 235K; an increase partly due to the accumulation of applications from Puerto Rico and the Virgin Islands following the hurricanes. Continued claims hit another long-term low coming in at 1.86M.

CPWM Weekly Market Monitor (2017.11.20)