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Weekly Update

November 17, 2017

The Economy

  • Consumer prices increased by 0.1% in October and by 2.0% year over year; moderating energy prices mitigated the effects of climbing rental and healthcare costs. The more closely followed core rate (which removes the effects of food and energy) firmed to 1.8%, likely keeping the Federal Reserve (Fed) on track for this year’s third interest-rate hike in December. Producer prices rose by 0.4% for the month, as trade service prices gained and energy expenses declined.

  • Import prices inched up by 0.2% in October, as lower food prices offset higher fuel and capital goods costs. Year-over-year growth slowed, but still gained 2.5%, as a weak U.S. dollar continued to support underlying inflation. Export prices were unchanged in October, narrowing their year-over-year gain to 2.7%.

  • Retail sales showed a 0.2% gain in October, as consumer spending pivoted lower. The slowdown in sales may be a result of the reversal from September’s hurricane-related replacement surge in autos, building materials and fuel.

  • Initial jobless claims rose by 10,000 to 249,000 in the week ending November 11. The more-stable four-week moving average climbed by 6,500 to 237,750, its first upward movement in almost two months. Continuing claims tumbled by 44,000 to 1.86 million in the week ending November 4, while the four-week moving average of continuing claims fell to a 43-year low of 1.89 million. Economists suggest a tight labor market will eventually give a boost to wage growth as companies look to find talented workers.

  • The Philadelphia Fed Survey showed that regional manufacturing growth expanded during November, although at a slower pace; workforce measurements remained solidly above neutral, indicating optimism about growth in future manufacturing activity.

  • Housing starts jumped by a higher-than-expected 13.7% in October (a one-year high) as homebuilders returned to construction following hurricane-driven disruptions in September.

  • Industrial production rose by a better-than-expected 0.9% in October as factory activity continued to recover from the repercussions of recent hurricanes.

  • Mortgage-purchase applications edged 0.4% higher in the week ending November 10 as rates remained unchanged. Refinancing activity (which is sensitive to even small rate changes) increased by 6% in the same period.

  • The eurozone’s economy expanded by 0.6% in the third quarter, its fastest growth in one year, confirming wide-ranging continued recovery in the region.

  • U.K. retail sales improved by 0.3% in October despite recent inflationary pressures on consumers. However, year-over-year growth slid by 0.3% to a four-year low.

  • China’s industrial production grew by 0.5% in October and by 6.2% year over year. Utilities output saw strong, but slower, expansion, while manufacturing benefited from solid output growth.

     

    U.S. Economic Calendar

  • November 20: Leading Indicators

  • November 21: Existing Home Sales

  • November 22: Mortgage Applications, Durable Goods Orders, Jobless Claims, Consumer Sentiment, FOMC Minutes

  • November 24: PMI Composite Flash

Stocks

  • Global equities were lower this week. Developed markets lagged emerging markets.
  • U.S. equity sectors were mixed. Consumer discretionary and consumer staples led, while energy and industrials lagged. Growth stocks had a slight edge over value stocks and small-company stocks beat large-company stocks.

Bonds

  • Global bond markets were mostly higher this week. Global government bonds outperformed, followed by corporate bonds. High-yield bonds lagged.
  • The yield curve flattened to a 10-year low after consumer price data indicated subdued inflationary pressure.

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.

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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.

 

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