AUGUST 15TH - WEEKLY UPDATE
- U.S. equities fell during a week of geopolitical tension with the S&P 500, Dow Jones and Nasdaq all posting a loss. Oil dipped and gold was up for the week. The 10-year U.S. Treasury yield closed at approximately 2.22%.
- Tensions with North Korea populated headlines during the period. A new round of harsher sanctions from the United Nations drew the support of China, North Korea’s largest trading partner. In response to the latest developments, President Donald Trump told reporters that the country should refrain from threatening the U.S., saying that if North Korea escalates their nuclear threat, “they will be met with fire and fury like the world has never seen.”
- June’s JOLTS report showed total nonfarm job openings at 6.2M, the highest level since the inception of the series in December 2000. This was higher than the consensus for 5.6M and above May’s upwardly revised level of 5.7M (was 5.7M). Hires and separations were little changed at 5.4M and 5.2M, respectively, and the quits rate remained at 2.1%.
- The National Federation of Independent Business (NFIB) said its index of small business optimism (which has been viewed as a proxy for the post-election “animal spirits” dynamic) increased to 105.2 in July from 103.6 in June, preserving the surge that started the day after the election.
- Inflation disappointed with the headline consumer price index (CPI) up 0.1% month-to-month in July following an unchanged reading in June, below consensus for a 0.2% increase. The year-over-year rate of growth pushed up to 1.7% from 1.6%, below the 1.8% consensus. Core CPI also increased 0.1% month-to-month in July following a 0.1% gain in the prior month, below the 0.2% consensus. This marked the fifth straight month of softer-than-expected core inflation.
- There continues to be market consensus that the Federal Reserve will make a September balance-sheet announcement, with dovish members suggesting such a move despite softer inflation trends. Chicago Fed President Charles Evans told Reuters that it would be “quite reasonable to begin” balance-sheet normalization at next month’s meeting, and reiterated that the runoff will have little impact on markets given it has been so well telegraphed.