The U.S. stock market ended the week at all-time highs after receiving a late-week boost on news of U.S. and China trade optimism and better than expected retail sales. Despite the new trade optimism, interest rates ended the week lower as the 10-year treasury yield dropped from 1.94% to 1.83%. Meanwhile the spread between the 10-year treasury yield and the 2-year treasury yield narrowed slightly as it dropped from 0.26% to 0.23%. The price of gold rose by a slight 0.55% to $1,467 an ounce amid global economic concerns, and the price of crude oil rose by a relatively moderate 0.73% on the week to $57.82 a barrel.
THIS WEEK’S ECONOMIC HIGHLIGHTS
- The Consumer Price Index (CPI), a measure of retail inflation, jumped by 0.4% in October, its fastest rate in seven months. Core CPI, which excludes the volatile food and energy prices, rose a more moderate 0.2% in October. Over the past year, CPI has risen at a stable rate of 1.8% while core CPI has risen 2.3%.
- The Producer Price Index (PPI), a measure of wholesale inflation, also jumped by a strong 0.4% during the month of October. However, over the past year PPI has risen by only 1.1%, its lowest rate in three years. Core PPI, which excludes the volatile food and energy prices, rose by a lesser 0.1% in October, but over the past year has risen at a relatively higher yet still low rate of 1.5%.
- Initial unemployment claims rose by a relatively large 14,000 to a total of 225,000 for the week ending November 9th. Meanwhile the more stable four-week average of initial claims only rose 1,750 to 217,000. Continuing unemployment claims, which lags initial claims by a week, fell by 10,000 to 1.68 million. Despite the jump in initial claims, total unemployment claims still remain near its lowest levels since the early 1970s.
- Retail sales rebounded by 0.3% in October after falling by 0.3% the month prior. Most of the gain in retail sales came from increases in automobile sales, gasoline sales, and ecommerce. When excluding automobile sales, which tends to have inconsistent month-to-month demand, retail sales rose by 0.2% in October.
- The manufacturing sector continues to struggle as industrial production dropped by 0.8% in October, its largest single month decrease in 17 months. Even though the manufacturing sector is in a technical recession and industrial production continues to fall, October’s report was greatly impacted by the United Auto Workers strike at General Motors.
“Risk is like fire: If controlled it will help you; if uncontrolled it will rise up and destroy you.”
– Theodore Roosevelt
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