September 26th – Weekly Update

  • U.S. equities spiked on Wednesday following the Federal Open Market Committee (FOMC) announcement that interest rates will remain on hold for the time being. All major U.S. equity indexes, including the S&P 500, Nasdaq and Dow, posted weekly gains. International markets were also up for the period with the U.K. FTSE 100, Stoxx Europe 600 and Global Dow all finishing higher. After five sessions of decline, the 10-year U.S. Treasury note closed at approximately 1.6%. Gold prices rose and oil was slightly up.
  • The FOMC held rates steady, as expected, though three participants favored a raise at the present time. The FOMC noted that near-term risks to its outlook appear roughly balanced, and that the case for hiking rates in December has strengthened.
  • The Bank of Japan (BoJ) affirmed its monetary easing policy, alleviating market worries around uncertain central bank support. The BoJ stated its intention to target a 0% yield on the 10-year government bond, its newest attempt to ignite inflation in the Japanese economy. The 10-year JBG yield, which had traded around – 3 basis points (bp) before the announcement, dropped to -5 bp afterwards.
  • The U.S. housing market displayed conflicting data. The National Association of Homebuilders’ monthly housing market index rose to 65 in September from 59 in August, an 11-month high. However, August housing starts declined 5.8% to indicate a sharp drop in building activity. Mortgage applications also took a dive falling 7.3%, week over week.
  • Bloomberg reported that U.S. consumer confidence reached its lowest point since December 2015, implying a negative view of personal financial positioning, the current economic climate and prospects for increased spending.
  • The U.S. job market showed modest improvement with jobless claims declining by 8,000 to 252,000 as of September 17. As of September 10, the number of Americans claiming unemployment benefits decreased by 36,000 to 2.11 million.
  • European consumer confidence increased in September across the 28 countries, including the U.K. In contrast, the preliminary purchasing managers’ index (PMI), which measures a range of economic variables, fell to a 20-month low, indicating that growth in the area remains lethargic. Third quarter GDP expansion is estimated at 0.3%.

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