The Market Commentator™

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The Market Week in Review

The U.S. stock market ended the week lower as Federal Reserve officials reported that they would only cut interest rates by a quarter of a percent, as opposed to the half of a percent expected.  That said, interest rates moved lower with the benchmark 10-year treasury yield falling from 2.10% a week ago to 2.05% today.  The spread between the 10-year yield and the 2-year treasury yield was little changed on the week, but remains historically very narrow at 0.27%.  The price of gold rose by 0.6% to $1,426 an ounce amid hope of a rate cut.  The U.S. dollar index (DXY), which typically moves inversely to the price of gold, rose from 96.82 a week ago to 97.15 today amid better than expected retail sales data.  The price of crude oil fell by 7.7% to $55.68 a barrel as slowing demand and oversupply of the finite resource holds the price down.

This Week’s Economic Highlights

  • June marked the fourth consecutive rise in retail sales as it increased by a strong 0.4%.  Excluding gasoline sales, which recognized a big drop, retail sales rose by an even stronger 0.7%.
  • Industrial Production continues to show signs of slowing as it saw no growth in the month of June.  Since the beginning of 2019 industrial production has fallen by over 3.0%, bringing its year-over-year growth rate to a relatively low 1.3%.
  • U.S. housing starts fell by 0.9% in June to a seasonally-adjusted annualized rate of 1.25 million.  Meanwhile U.S. housing permits, a leading indicator of housing starts, fell by a more drastic 6.1% to a seasonally-adjusted annualized rate of 1.22 million (it’s lowest since the middle of 2017).
  • Initial unemployment claims rose by 8,000 to 216,000 for the week ending July 13th, while its more stable four-week average fell by 250 to 218,750.  Continuing unemployment claims, which lag initial claims by a week, fell by 42,000 to 1.69 million.  Both initial and continuing unemployment claims are near all-time lows.
  • After falling to 0.3 in June, the Philly Fed manufacturing index rebounded back to 21.8 in July.  (Any reading above 0 indicates improving manufacturing business conditions.)

Quote

“A great way to lose money in financial markets is to play the same game as everyone else.”

– Brett Steenbarger

 

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