The Market Week in Review

Despite lower than expected retail sales and industrial production data, the U.S. stock market ended the week mostly higher as earnings season kicked off to a great start.  Interest rates were little changed with the 10-year treasury yield sitting at 1.76%. Meanwhile the spread between the 10-year treasury yield and the 2-year treasury yield continued to widen after inverting in mid-August to 0.16% today.  The price of gold edged slightly higher amid worse than expected economic data, rising 0.4% to $1,495 an ounce.  The price of crude oil tumbled 6.7% amid rising concerns on trade and increasing stockpiles.

This Week's Economic Highlights

  • U.S. retail sales fell by 0.3% in September, marking its first pullback in seven months.  When excluding the sales of automobiles, which tend to have inconsistent month-to-month demand, retail sales fell by 0.1%.  However, some of this was mitigated by the fact that August’s retail sales were revised upward from 0.4% to 0.6%.

  • Initial unemployment claims saw a modest increase of 4,000 to 214,000 for the week ending October 12th.  Meanwhile the more stable four-week average of initial claims actually rose only by 1,000 to 213,750.  Continuing unemployment claims, which lags initial claims by a week, decreased by 10,000 to 1.68 million.

  • Housing starts fell by 9% in September to a seasonally adjusted annualized rate of 1.26 million after reaching a 12-year high in August.  Meanwhile, housing permits (a leading indicator of housing starts) only fell by 3% to a seasonally adjusted annualized rate of 1.39 million.

  • U.S. industrial production continued to falter as it dropped by 0.4% in September, its largest decrease in five months.  Despite the large decrease in industrial production, it may be overstated due to the United Auto Workers strike at General Motors.  However, the U.S. and China trade war has also caused industrial production headwinds as the manufacturing sectors sits in a technical recession.

Quote

“Patience creates wealth.  In other words, time creates wealth.”

– D. Muthukrishnan

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