The U.S. stock market experienced little change over the week as earlier losses from poor ISM index data was mitigated by later-week jobs data. Interest rates moved lower with the 10-year treasury yield dropping from 1.69% last week to 1.52% today. Meanwhile the spread between the 10-year treasury yield and the 2-year treasury yield continues to widen after inverting in August as it currently sits at 0.12%. The price of gold rose a slight 0.46% to $1,510 an ounce amid a mix bag of economic data. The price of crude oil fell 5.79% to $52.89 a barrel amid poor manufacturing data and rise in inventories.
This Week's Economic Highlights
Approximately one year ago the ISM manufacturing index was over 60% but has since dropped to 47.8% as manufacturers experience their biggest contraction since the 2008-2009 recession. (Readings below 50% indicate worsening manufacturing conditions.) The decline in the index reflects a slowdown in global economies and worsening trade between the U.S. and China.
- The ISM non-manufacturing index, a measure of service-orientated companies, dropped form 56.4% in August to 52.6% in September, its lowest reading in three years. Much like the ISM manufacturing index, the ISM non-manufacturing index has been falling from its high of 60.8% last year but still remains above 50%. (Readings below 50% indicate worsening manufacturing conditions.)
- Initial unemployment claims rose by 4,000 to 219,000 for the week ending September 28th. Meanwhile the more stable four-week average of initial claims was unchanged at 212,500. Continuing unemployment claims, which lags initial claims by a week, fell by a slim 5,000 to 1.65 million. Both initial and continuing unemployment claims remain near historic lows.
- The U.S. added 136,000 jobs in September, coming in below the expected 150,000. Despite the relatively low monthly increase in September, both August’s and July’s jobs numbers were revised upward for a combined 45,000. Meanwhile the unemployment rate dropped from 3.7% to 3.5% and the wage growths year-over-year rate fell from 3.2% to 2.9%.
“The market can only know what is knowable. It can’t resolve uncertainties that are unresolvable. So, when there is a large amount of economic uncertainty out there, there’s going to be a large amount of volatility in prices.”
– Eugene Fama
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