The Market Week in Review

The U.S. stock market finished the week lower as an inversion of the yield curve had investors flee to safer assets.  That said the yield on the 10-year treasury dropped from 1.73% last week to 1.55% today as investors buy-up the risk-free asset class.  Although the spread between the 10-year treasury and the 2-year treasury inverted mid-week, it actually finished the week at a wider, yet still very narrow, 0.07%.  The price of gold rose 0.92% to $1,524 an ounce which can also primarily be attributed to the inversion of the yield curve.  The price of crude oil rose a relatively tame 1.0% on the week to $54.94 a barrel.

This Week's Economic Highlights

  • The Consumer Price Index (CPI), a measure of retail inflation, rose 0.3% in July after rising by a more moderate 0.1% the month prior.  Core CPI, which excludes the volatile food and energy prices, also rose by 0.3%.  Over the past year CPI has grown at a stable 1.8% while core CPI grew at a faster rate of 2.2%.
  • Initial unemployment claims rose by 9,000 to 220,000 for the week ending August 10th, while its more stable four-week average rose by 1,000 to 213,750.  Continuing unemployment claims, which lag initial claims by a week, increased by 39,000 to 1.73 million.
  • Retail sales jumped by 0.7% in July, marking its largest increase in four months.  Excluding automobiles, which tend to have inconsistent month-to-month demand, retail sales rose by 1.0%.  The jump in retail sales came largely from a 2.8% increase in internet retailers, which is likely tied to Amazon Prime Day and competing sales from other online retailers.
  • Industrial production fell by 0.2% in July, resulting in the fourth monthly drop so far this year.  Over the past year industrial production is only up a very slight 0.5%, as oil and manufacturing production suffer.
  • Housing starts fell by 4.0% in July to a seasonally adjusted annualized rate of 1.19 million.  Meanwhile building permits, a leading indicator of housing starts, rose by 8.4% to 1.34 million, indicating better times ahead.


“Prices move along the ‘line of least resistance’.  They will do whatever comes easiest.”

     -Jesse Livermore

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