Fixed Income

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FOMC Policy Normalization Statement

 

Global Bond Yields

Look at those year/y changes in yield!

Daily US Treasury Yields 

Foreign Exchange Market

 

Energy Complex

The Baker Hughes rig count lost 8 this week. There are 822 oil and gas rigs operating in the US – down 245 over last year.

  • Brent Crude Oil lost 0.53% this week closing at $61.69/bbl
  • WTI Crude Oil lost 0.81% this week to close at $56.20/bbl
  • Heating Oil lost 1.91% this week closing at $1.93/gallon
  • Natural Gas gained 10.37% this week closing at $2.71 per million BTUs
  • Unleaded Gas gained 1.23% this week closing at $1.66/gallon

Metals Complex

  • Gold gained 0.41% this week closing at $1511.40/oz
  • Silver gained 0.70% on the week closing at $18.05/oz
  • Palladium gained 2.30% this week closing at $1784.30/oz
  • Platinum gained 2.22% this week closing at $954.00/oz
  • Copper lost 0.84% this week closing at $2.65/lb

 

Employment Picture

October Jobs Report –  BLS Summary – Released 11/1/19 – The US Economy added 128k nonfarm jobs in October and the Unemployment rate was little changed at 3.6%. Average hourly earnings increased by 6 cents.  Hiring highlights include Food Services and Drinking Places +48k, Social Assistance +20k, Financial Activities +16k, and Professional and Business Services +22k.

  • Average hourly earnings increased by 6 cents in October, y/y hourly earnings are up 3.0%.
  • U3 unemployment was little changed at 3.6%. U6 unemployment rate increased 0.1% to 7.0%.
  • The labor force participation rate was little changed in October at 63.3% (Unchanged year/y).
  • Average work week was unchanged at 34.4 hours.

Employment Cost Index – Released 10/31/19 – Compensation costs for civilian workers increased 0.7% for the 3-month period ending in September 2019. The 12 month period ending on September 2019 saw compensation costs increase by 2.8%, same as for the 12 month period ending September 2018. Wages and salaries were up 2.9% for the 12-month period ending September 2019, same as for the 12 month period ending September 2018. Benefit costs increased 2.3% for the 12-month period ending September 2019. For private industry workers, compensation costs increased 2.7% year-over-year, versus 2.9% for the 12 months ending September 2018. This report is published quarterly.

Weekly Unemployment Claims – Released Thursday 10/31/19 – In the week ending October 26th, initial claims were 218,000, an increase of 5,000 from the previous week’s revised level. The 4-week moving average was 214,750, a decrease of 500 from the previous week’s revised average.

Job Openings & Labor Turnover Survey JOLTS – Released 10/9/19 – The U.S. Bureau of Labor Statistics reported the number of job openings was little changed at 7.1 million on the last business day of August. Over the month, hires declined 0.2 million to 5.8 million and separations were little changed at 5.6 million.  Within separations, the quits rate was little changed at 2.3%. The layoffs and discharges rates was unchanged at 1.2%.

This Week’s Economic Data

Links take you to the data source

PMI Manufacturing ISM Index – Released 11/1 – October PMI remains in contraction territory as PMI slightly increased by 0.5% to 48.3% from September’s reading of 47.8%. The New Orders Index was up 1.8% from September’s reading of 47.3% to 48.1%. The Production Index registered 46.2% down 1.1%.

U.S. Construction Spending – Released 11/1 – Construction spending increased by 0.5% in September measuring at a seasonally adjusted annual rate of $1,293.6 billion. The September figure is 2.0% below the September 2018 estimate. Private construction spending was 0.2% above the revised August estimate at $959.9 billion. Public construction spending was 1.5% above the revised August estimate at $331.9 billion. 

Chicago PMI Released 10/31  Chicago PMI fell 3.9 points in October falling to 43.2, down from 47.1 in September. This decrease shows the index falling to the lowest level since December 2015. New Orders and Order Backlogs saw sharp declines and were the only components with declines. Demand weakened significantly in October with New Orders declining to its lowest level since March 2009. Order backlogs saw the largest monthly decline. Production, inventory, and employment components all saw minor increases. 

Personal Income – Released 10/31 – Personal Income increased 0.3% in September according to the BEA. The majority of the increase in September was due to increases in personal interest income, farm proprietor’s income, and gov’t social benefits to persons. Real PCE (the Feds preferred inflation gauge) increased 0.2% in September. Real disposable personal income increased 0.3% in September.

Advance Estimate of 3rd Quarter GDP  – Released 10/30 – According to the advance estimate released by the Bureau of Economic Analysis, Real Gross Domestic Product (Real GDP) increased at an annual rate of 1.9% in the third quarter of 2019.  The advance estimate is based on data that are incomplete or subject to further review. The third quarter increase in real GDP observed positive contributions from personal consumption expenditures (PCE), federal gov’t spending, state and local gov’t spending, and residential fixed investment that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, and imports.  

Consumer Confidence Released 10/29  The Consumer confidence index declined slightly in October following a decline in September. The Index now shows a reading of 125.9 down from 126.3 in September.  Expectations weekend slightly due to concerns over job prospects and business conditions contributing to the slight decline in confidence; however, expectations overall still remain strong and consumers remain confident and willing to spend.

Recent Economic Data

Links take you to the data source

New Residential Sales – Released 10/24 – Sales of new single-family homes declined 0.7% to 701k, seasonally adjusted, in September. The median sales price of new homes sold in September was $299.4k with an average sales price of $362.7k. At the end of September the seasonally adjusted estimate of new homes for sale was 321k. This represents a supply of 5.5 months at the current sales rate.

Durable Goods – Released 10/24 – New orders for manufactured durable goods decreased $2.8 billion or 1.1% to $248.2 billion in September. The decrease in September follows three consecutive months of increases. Transportation equipment drove the decrease; down $1.0 billion or 1.2%.

Existing Home Sales – Released 10/22 – Existing home sales declined in September. Sales declined 2.2% to a seasonally adjusted rate of 5.38 million. This decline follows two consecutive months of growth. Sales are currently up 3.9% from one year ago. Housing inventory remained unchanged at 4.1 months of inventory and the total housing inventory remains at 1.88 million. The median sales price for all types of homes was $272,100, up 5.9% year/y.

Housing Starts – Released 10/17 – New home starts in September were at a seasonally adjusted rate of 1.256 million; down 9.4% below August but 1.6% above last September’s rate. Building Permits were at a seasonally adjusted rate of 1.387 million, down 2.7% compared to August but up 7.7% over last year.

Industrial Production and Capacity Utilization – Released 10/17 – Industrial production declined 0.4% in September. In the third quarter industrial production rose at an annual rate of 1.2%. Manufacturing production declined 0.5%. The index for utilities gained 1.4% and the index for mining fell 1.3%. Total capacity utilization decreased 0.4% to 77.5% in September which is 2.3% below its long run average. 

Retail Sales – Released 10/16 – U.S. retail sales for September declined 0.3% to $525.6 billion. U.S. retail sales are up 4.1% year/y.

Consumer Price Index – Released 10/10 – The Consumer Price Index unchanged in September. Core CPI, which excludes food and energy increased 0.1%. The monthly changes left total CPI up 1.7% year-over-year and core CPI up 2.4%. 

Producer Price Index – Released 10/8 – The Producer Price Index for final demand decreased 0.3% in September. Core PPI was down 0.1%. Year over year the index for final demand rose 1.7%.

Consumer Credit  Released 10/7 – Consumer credit increased at a seasonally adjusted annual rate of 5.25% in August. Revolving and nonrevolving credit decreased at annual rates of 2.25% and increased 7.75% respectively. Total Outstanding consumer credit is currently at $4.100 trillion. 

U.S. Trade Balance  Released 10/4 –  According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in August to $54.9 billion. This increase is $0.9 billion higher than the deficit recorded in July. August exports were $207.9 billion, $0.5 billion more than July exports. August imports were $262.8 billion, $1.3 billion more than July imports. The goods and services deficit has increased $28.3 billion or 7.1% year to date. Year to date exports and imports decreased $3.2 billion or 0.2% and increased $25.1 billion or 1.2% respectively.   

PMI Non-Manufacturing Index (ISM Services) – Released 10/3 – Economic activity in the non-manufacturing sector grew in September for the 116th consecutive month. ISM Non-Manufacturing registered 52.6 percent, which is 3.8 percentage points lower than the August reading of 56.4 percent. This represents continued growth in the non-manufacturing sector, at a slightly slower rate.

US Light Vehicle Sales – Released 9/4 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 17.07 million units in August versus a SAAR of 16.82 million units in July. 

Next week we get data on ISM Services, Consumer Credit, the U.S. Trade Balance, and JOLTS.

 

Data Sources:

Bureau of Economic Analysis (BEA)
Congressional Budget Office (CBO)
U.S. Bureau of Labor Statistics (BLS)
Federal Reserve Economic Data (FRED Charts)

CME Fed Watch
U.S. Treasury – Yields
U.S. Census Bureau
Institute for Supply Management (ISM)
Weekly DOL Employment Data
BLS Monthly Jobs Report
JOLTS

US Energy Admin (EIA)
BLS Consumer Price Index CPI
BLS Producer Price Index PPI
Atlanta Fed GDPNOW
NY Fed Nowcast GDP
US Census Bureau Housing Starts

Consumer Credit
USCB Retail Sales
Construction Spending
Federal Reserve Dot Plots
NY Empire Index
Philadelphia Federal Reserve
P/E Ratio Data -Yardeni Research

Technical Analysis Info:

StockCharts.com – Financial Charts
Exponential vs Simple moving average

Other Links:

1973 Arab Oil Embargo
Hunt Brothers Silver
Long-Term Capital bailout