The Dow and S&P 500 snapped a four-week losing streak and along with the Nasdaq, each gained over 1.5%. Small caps significantly outperformed with the S&P600 gaining 5%. Value beat growth by 80 bps this week but the delta between the two YTD is over 34%.
COVID cases are on the rise again in many countries including the U.S with the 7 day average of new cases over 47k here. The UK is experiencing new record daily cases and local lockdowns are gaining steam throughout the country. Worldwide, as of this writing, 35 million people have been infected with a death count that now has surpassed one million. John Hopkins Virus Tracker.
September payroll data was released Friday showing the economy created 661k jobs bringing the unemployment rate to 7.9% from 8.4% in August. The number of new jobs was somewhat underwhelming and in general, was below expectations. BLS Summary The September data showed 141 million people employed, down aprx. 11 million from the high in February.
9/16 FOMC Statement Credit, Liquidity and Balance Sheet Federal Reserve Dot Plots US Debt Measurement US Corporate Debt Almost 7 Trillion Treasury.gov yields FOMC Policy Normalization Statement Longer Run Goals August 2020
Global Bond Yields
Foreign Exchange Market
The Baker Hughes rig count gained 5 this week. There are 266 oil and gas rigs operating in the US – down 589 over last year.
- Brent Crude Oil lost 7.40% this week closing at $39.27/bbl
- WTI Crude Oil lost 7.95% this week to close at $37.05/bbl
- Heating Oil lost 4.26% this week closing at $1.09/gallon
- Natural Gas lost 13.15% this week closing at $2.44 per million BTUs
- Unleaded Gas lost 5.57% this week closing at $1.12/gallon
- Gold gained 2.21% this week closing at $1907.60/oz
- Silver gained 4.05% on the week closing at $24.03/oz
- Palladium gained 4.63% this week closing at $2325.00/oz
- Platinum gained 5.87% this week closing at $891.40/oz
- Copper gained 0.22% this week closing at $2.98/lb
September Jobs Report – BLS Summary – Released 10/2/2020 – The US Economy gained 661k million nonfarm jobs in September and the Unemployment rate declined to 7.9%. Average hourly earnings were steady at $29.47. Hiring highlights include Leisure and Hospitality +318k, Retail Trade +142k, Professional and Business Services +89k.
- Average hourly earnings increased held steady in September at $29.47.
- U3 unemployment rate declined to 7.9%. U6 unemployment rate declined to 12.8%.
- The labor force participation rate decreased 0.3% to 61.4%.
- Average work week increased by 0.1 hours to 34.7 hours.
Weekly Unemployment Claims – Released Thursday 10/1/2020 – Initial jobless claims for the week ending September 26thdecreased by 36k to 837k. The 4-week moving average was 867k, a decrease of 12k.
Job Openings & Labor Turnover Survey JOLTS – Released 9/9/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased to 6.6 million on the last business day of July. Over the month, hires decreased to 5.8 million and separations was little changed at 5.0 million. Within separations, the quits rate increased to 2.1%. The layoffs and discharges rates decreased to 1.2%.
Employment Cost Index – Released 7/31/2020 – Compensation costs for civilian workers increased 0.5% for the 3-month period ending in June 2020. The 12 month period ending on June 2020 saw compensation costs increase by 2.7%, same as the 12 month period ending June 2019. Wages and salaries increased 2.9 percent over the year and increased 2.9 percent for the 12-month period ending in June 2019. Benefit costs increased 2.2 percent for the 12-month period ending in June 2020. In June 2019, the increase was 2.3 percent. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
PMI Manufacturing ISM Index – Released 10/2/2020 – September PMI declined 0.6% to 55.4% from August’s reading of 56.0%. The New Orders Index was down 7.4% from August’s reading of 67.6% to 60.2%. The Production Index registered 61.0%, down 2.3%.
U.S. Construction Spending – Released 10/1/2020 – Construction spending increased 1.4% in August measuring at a seasonally adjusted annual rate of $1,412.8 billion. The August figure is 2.5% above the August 2019 estimate. Private construction spending was 1.9% above the revised July estimate at $1,061.4 billion. Public construction spending was 0.1% above the revised July estimate at $351.4 billion.
Personal Income – Released 10/1/2020 – Personal income decreased $543.5 billion or 2.7 percent in August according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $570.9 billion or 3.2 percent and personal consumption expenditures (PCE) increased $141.1 billion or 1.0 percent.
Chicago PMI – Released 9/30/2020 – Chicago PMI increased 11.2 points climbing to 62.4. This marks three consecutive months above the 50-mark following a full year under it. It also marks the highest reading since December 2018. All five main indicators saw monthly gains in September, with Production and New Orders leading the way. On a quarterly basis, Supplier Deliveries was the only category to see a decline.
Third Estimate of 2nd Quarter 2020 GDP –Released 9/30/2020 – Real gross domestic product (GDP) decreased at an annual rate of 31.4 percent in the second quarter of 2020, according to the third estimate released by the Bureau of Economic Analysis. The decline in GDP seen in the second quarter marks the worst quarterly decline in GDP to date. This GDP estimate is based on data that are more complete than that of the data of the advance estimate and second estimate. The upward revision with the third estimate primarily reflected an upward revision to personal consumption expenditures (PCE) that was partly offset by downward revisions to exports and to nonresidential fixed investment. The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Consumer Confidence – Released 9/29/2020 – The Consumer confidence index increased 15.5% in September following an decrease in August. The Index now shows a reading of 101.8, up from 86.3 in August.
Recent Economic Data
Links take you to the data source
Durable Goods – Released 9/25/2020 – New orders for manufactured durable goods in August increased for the fourth consecutive month up $1.0 billion or 0.4% to $232.8 billion. Machinery led the increase rising $0.5 billion or 1.5% to $31.2 billion.
New Residential Sales – Released 9/24/2020 – Sales of new single-family homes increased 4.8% to 1.011 million, seasonally adjusted, in August. The median sales price of new homes sold in August was $312,800 with an average sales price of $369,000. At the end of August the seasonally adjusted estimate of new homes for sale was 282k. This represents a supply of 3.3 months at the current sales rate.
Existing Home Sales – Released 9/22/2020 – Existing home sales increased in August making three consecutive months of positive sales gains. Sales increased 2.4% to a seasonally adjusted rate of 6.0 million in August. Sales are currently up 10.5% from one year ago. Housing inventory sits at 1.49 million units. Down 0.7% over last month. Down 18.6% over last year. Unsold inventory sits at a 3.0 month supply. The median existing home price for all housing types was $310,600.
Housing Starts – Released 9/17/2020 – New home starts in August were at a seasonally adjusted annual rate of 1.416 million; down 5.1% below July but 2.8% above last August’s rate. Building Permits were at a seasonally adjusted annual rate of 1.470 million, down 0.9% compared to July and down 0.1% over last year.
Retail Sales – Released 9/16/2020 – U.S. retail sales for August increased 0.6% to $537.5 billion. U.S. retail sales are up 2.4% year/y.
Industrial Production and Capacity Utilization – Released 9/15/2020 – In August Industrial production increased 0.4%. Total Industrial production is still 7.3% below its pre-pandemic February level. Manufacturing increased 1.0%. Mining production declined 2.5% due to severe weather from Tropical Storm Marco and Hurricane Laura. Total industrial production was 101.4% of its 2012 average which is 7.7% lower in August than a year ago. Total capacity utilization increased 0.3% to 71.4% in August which is 8.4% below its long run average.
Consumer Price Index – Released 9/11/2020 – The Consumer Price Index increased 0.4% in August. Core CPI, which excludes food and energy also increased 0.4%. The monthly changes left total CPI up 1.3% year-over-year and core CPI up 1.7%.
Producer Price Index – Released 9/10/2020 – The Producer Price Index for final demand increased 0.3% in August. PPI less food and energy also increased 0.3% in August.
Consumer Credit – Released 9/8/2020 – In July, consumer credit decreased at a seasonally adjusted rate of 3.5%. Revolving credit decreased at an annual rate of 0.5 percent, while nonrevolving credit increased at an annual rate of 4.75 percent. Total Outstanding consumer credit is currently at $4.139 trillion.
US Light Vehicle Sales – Released 9/4/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.193 million units in August.
PMI Non-Manufacturing Index (ISM Services) – Released 9/3/2020 – Economic activity in the non-manufacturing sector grew in August for the third consecutive month. ISM Non-Manufacturing registered 56.9 percent, which is 1.2 percentage points below the adjusted July reading of 58.1 percent.
U.S. Trade Balance – Released 9/3/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in July by $10.1 billion to $63.6 billion. July exports were $168.1 billion, $12.6 billion more than June exports. July imports were $231.7 billion, $22.7 billion more than June imports. The goods and services deficit increased $6.4 billion or 1.8% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $257.8 billion or 17.5% and decreased $251.3 billion or 13.8% respectively.
Next week we get data on the U.S. Trade Balance, ISM Services, U.S. Light Vehicles Sales, Consumer Credit, and JOLTS.