October 2nd – Weekly Update

  • U.S. equities notched up for the period with the S&P 500, Nasdaq and Dow Jones posting gains for the week. Oil also finished higher, gold experienced a loss. The 10-year U.S. Treasury yield closed at approximately 2.33%.
  • Tensions between the U.S. and North Korea remain elevated. Foreign Minister Ri Young-ho commented that a recent tweet from president Donald Trump claiming that North Korea’s leadership “won’t be around much longer” constituted a declaration of war, and that North Korea reserves the right to shoot down U.S. strategic bombers.
  • Germany also made headlines as Chancellor Angela Merkel’s CDU/CSU party won a fourth term in government but performed worse-than-expected, securing 33% of the vote – the worst performance since the first national elections were held in 1949.
  • Federal Reserve (Fed) Chair Janet Yellen commented about considerable uncertainties surrounding the inflation outlook. However, she also reiterated that transitory factors are likely holding back prices and the Fed should be wary about moving too gradually. Yellen added that it would be imprudent to keep policy on hold until inflation moves back to 2%.
  • The second revision for Q2 GDP came in better than expected, rising 3.1% versus the 3% consensus estimate (which was also the first revision). That was an acceleration from +1.2% in Q1.
  • August new home sales came in at a 560K seasonally adjusted annual rate (SAAR), below consensus for 580K and a drop from July’s upwardly revised 580K (was 571K). On a year-to-year basis, sales were down 1.2%. The August average sales price came in at $368,100, down from July’s $371,300. Pending home sales fell 2.6% month-to-month in August. That was worse than the 0.5% decline expected, and was the fifth decline in the past six months. On a year-to- year basis, pending home sales fell 2.6%. The report noted while hurricane disruptions likely impacted the overall data, the weakness was widespread across the country.
  • September consumer confidence slightly dipped, coming in at 119.8 vs. August’s 120.4 level and the 120.0 consensus estimate. The Present Situation Index ticked down to 146.1 from 148.4 in August, while the Expectations Index rose to 102.2 from the prior month’s 101.7

CPWM Weekly Market Monitor (2017.10.02)