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Weekly Update – May 17, 2019

  • Global stocks were down for the week, unable to bounce back after Monday’s steep decline. The energy and industrials sectors posted the biggest losses. The utilities sector added to performance. Trade disputes remained the backdrop for the week, with little changing. Neither the United States nor China moved to reverse plans to raise tariffs.
  • The Trump administration decided to sign an executive order that could target Chinese telecommunication companies, Huawei Technologies Co. and ZTE Corp. This was not a huge weight on the market. Instead, there seemed to be some boost from positive economic data, as consumer sentiment came in at a 15-year high. In addition, the White House announced a six-month stay on auto tariffs, as well as an understanding with Canada and Mexico to remove steel and aluminum tariffs.
  • Treasurys were mostly stronger and the dollar rose following consumer sentiment data. Gold finished down, and oil was weaker. The yield on the ten-year U.S. Treasury ended the week at 2.40%.
  • Japan’s current account surplus, a gauge of international trade, decreased for the first time in five years. The trade dispute between the U.S. and China has added pressure on Japan’s exports.
  • The NFIB’s Small Business Optimism index in the U.S. posted gains, which was in line with positive employment data. Still, MBA mortgage applications decreased in May, as trade disputes weighed on consumers’ desire to buy a home.
  • U.S. industrial production was down in April, a clear sign of the slowing global economy. New orders slowed down in May. Trade disputes continue to negatively impact the manufacturing sector. The New York Federal Reserve’s May Empire State survey came in above expectations. The Philadelphia Fed manufacturing index rose in May. The University of Michigan’s consumer sentiment index in May also rose, though the gains were recorded before trade negotiations with China crumbled.
  • Initial jobless claims came in below expectations in May. Retail sales for April were down, below consensus, as consumer spending lost momentum entering the second quarter. Auto sales were weak, while gasoline station sales posted their third month of increases.

CPWM Weekly Market Monitor (2019.05.17)

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