You are here

Weekly Update

December 15, 2017

The Economy

 

  • The U.S. economy added 228,000 jobs in November—better than economists’ expectations, but less than the previous month’s strong gain. The unemployment rate held at 4.1%, its lowest level since December 2000. Wage growth remained historically low, rising by only 2.5% year over year.

  • Revised non-farm productivity was flat at 3% in the third quarter. Output climbed by 4.1%, while unit labor costs retreated by 0.2%.

  • Initial jobless claims slid by 2,000 to 236,000, their third straight weekly decline, in the week ending December 2. The less-volatile four-week moving average fell by 750 to 241,500. Continuing claims fell 52,000 to 1.91 million in the week ending November 25. Economists believe the historically tight labor market will begin to push wage growth higher as companies seek talented workers.

  • The trade deficit widened by 8.6% to $48.7 billion in October, a nine-month high, from a revised $44.9 billion in September. Imports rose by 1.6%, driven by higher oil prices; exports were unchanged as overseas demand for consumer and capital goods lagged. A higher trade deficit detracts from economic growth.

  • Outstanding consumer credit (which measures non-mortgage debt) increased by 6.5% in October, the fastest pace in 11 months, after expanding by a revised 6.1% in September. Revolving credit reached a one-year high, offering confidence in near-term consumer spending—but also suggesting a possible lack of sustainability as debt burdens increase.

  • The preliminary December estimate of the University of Michigan’s consumer sentiment index came in lower than November’s reading (particularly within consumer expectations), but reached a 17-year high in current conditions, a positive for holiday-related consumer spending.

  • Mortgage-purchase applications climbed 2% (their fifth consecutive gain) in the week ending November 24 as mortgage rates fell. Refinancing activity (which is sensitive to even small rate changes) jumped by 9% in the same period. The report showed accelerating strength in the housing market.

  • Eurozone producer prices expanded by 0.4% in October, driven by higher costs for energy and intermediate goods. Year-over-year prices grew by 2.5%. Producer-price changes typically correlate with movements in consumer inflation.

  • China reported a $40 billion trade surplus in November. Both imports and exports appreciated from the levels reported for October.

  • Revised data showed that Japan’s third-quarter gross domestic product expanded by 0.6%—the seventh consecutive quarterly gain, beating the preliminary estimate. Private non-residential investment was strong, while household consumption detracted.

 

U.S. Economic Calendar

 

  • December 11: Job Openings and Labor Turnover Survey (JOLTS)

  • December 12: Producer Prices

  • December 13: Mortgage Applications, FOMC Meeting Announcement

  • December 14: Jobless Claims, Retail Sales, Import and Export Prices

  • December 15: Industrial Production

    Stocks

  • Global equities were lower this week. Emerging markets lagged developed markets.

  • Most U.S. equity sectors were positive. Financials and industrials led, while utilities and energy underperformed. Growth stocks had the edge over value stocks and large-company stocks beat small-company stocks.

    Bonds

  • Global bond markets fell this week. Global government bonds lagged, followed by corporate bonds. High-yield bonds outperformed.

  • The Treasury yield curve flattened to a 10-year low, as analysts reported that expectations of tax reform passage could boost economic growth in the short term, but would be unlikely to trigger any change to a subdued outlook for inflation.

    The Numbers as of December 12, 2017

    1 Week

    YTD

    1 Year

    Friday's
    Close

    Global Equity Indices

     

     

     

     

    MSCI ACWI ($)

    -0.4%

    18.9%

    18.5%

    501.4

    MSCI EAFE ($)

    -0.3%

    18.6%

    19.3%

    1997.8

    MSCI Emerging Mkts ($)

    -1.4%

    27.6%

    25.2%

    1100.5

    US & Canadian Equities

     

     

     

     

    Dow Jones Industrials ($)

    0.4%

    23.1%

    24.0%

    24329.2

    S&P 500 ($)

    0.4%

    18.4%

    18.0%

    2651.5

    NASDAQ ($)

    -0.1%

    27.1%

    26.3%

    6840.1

    S&P/ TSX Composite (C$)

    0.4%

    5.4%

    5.3%

    16105.5

    UK & European Equities FTSE All-Share (£)

    1.1%

    4.9%

    8.0%

    4063.7

    MSCI Europe ex UK (€)

    0.9%

    11.8%

    14.9%

    1353.5

    Asian Equities Topix (¥)

    0.4%

    18.8%

    19.2%

    1803.7

    Hong Kong Hang Seng ($)

    -1.5%

    30.2%

    25.3%

    28639.9

    MSCI Asia Pac. Ex-Japan ($)

    -1.4%

    27.6%

    23.9%

    544.6

 

The Numbers as of                                                                                1 Week

December 12, 2017

YTD

1 Year

Friday’s
Close

Latin American Equities

 

 

 

MSCI EMF Latin America ($)                                                            -1.4%

15.0%

15.9%

2692.9

Mexican Bolsa (peso)                                                                           0.6%

4.2%

2.6%

47571.5

Brazilian Bovespa (real)                                                                       0.6%

20.8%

19.9%

72731.8

Commodities ($)

 

 

 

West Texas Intermediate Spot                                                              -1.7%

6.8%

12.8%

57.4

Gold Spot Price                                                                                    -2.8%

8.2%

6.5%

1247.6

Global Bond Indices ($)

 

 

 

Barclays Global Aggregate ($)                                                             -0.2%

6.8%

6.4%

482.0

JPMorgan Emerging Mkt Bond                                                             0.1%

8.9%

9.5%

804.6

10-Year Yield Change (basis points*)

 

 

 

US Treasury                                                                                                 2

-7

-3

2.38%

UK Gilt                                                                                                        5

4

-10

1.28%

German Bund                                                                                              0

10

-8

0.31%

Japan Govt Bond                                                                                         2

1

0

0.05%

Canada Govt Bond                                                                                     -5

14

20

1.86%

Currency Returns**

US$ per euro                                                                                               -1.1%

11.9%

10.9%

1.177

Yen per US$                                                                                              1.2%

-3.0%

-0.5%

113.49

US$ per £                                                                                                  -0.6%

8.5%

6.4%

1.339

C$ per US$                                                                                                 1.4%

-4.3%

-2.5%

1.286

Source: Bloomberg. Equity-index returns are price only, others are total return. *100

basis points = 1 percentage point. **Increases in U.S. dollars (USD) per euro or pound

indicate a decline in the value of the USD; increases in yen or Canadian dollars per USD indicate an increase in the value of the USD.

Disclaimer:

This information is not meant as a guide to investing, or as a source of specific investment recommendations, and Gibraltar Private Bank & Trust makes no implied or express recommendations concerning the manner in which any client’s accounts should or would be handled, as appropriate investment decisions depend upon the client’s investment objectives. The information is general in nature and is not intended to be, and should not be construed as, legal or tax advice. In addition, the information is subject to change and, although based upon information that Gibraltar Private Bank & Trust considers reliable, is not guaranteed as to accuracy or completeness. Gibraltar Private Bank & Trust makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information.

Investment Product: Not FDIC Insured • No Bank Guarantee • May Lose Value • Not a Deposit • Not Insured by Any Federal Government Entity

Disclosures:

Index returns are for illustrative purposes only and do not represent actual fund performance.

Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. There are risks involved with investing, including possible loss of principal. SIMC is a wholly owned subsidiary of SEI Investments Company.

 

 

 

Member FDIC •  Equal Housing Lender