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Weekly Updates

Weekly Update – October 10, 2016

  • U.S. equity markets finished the week lower after a modest, below-consensus jobs report. The Dow, Nasdaq and S&P 500 all lost ground. The British pound fell more than 4% as post-Brexit risk to the U.K. continues to be assessed. Oil finished the week higher as investors continue to consider OPEC’s ability to control production. Gold was down for the week and the 10-year U.S. Treasury yield concluded the period at approximately 1.7%.
  • September job gains totaled 156,000 while the unemployment rose slightly to 5%. These and other reports seemed to bring market consensus more in tune with the idea of a December rate hike, helped in part by recent hawkish Fedspeak. Fed funds futures now suggest a greater than 60% chance of a hike by year-end.
  • Vitor Constancio, vice president of the European Central Bank (ECB), stated that March 2017 is not necessarily the final date for quantitative easing and noted that the governing council would provide proper guidance about the future of the asset purchase program before then.
  • The ISM manufacturing index returned to expansion in September, coming in at 51.5, ahead of consensus and August’s contractionary 49.4 reading. New orders jumped to 55.1 from August’s 49.1 level, while the production index rose to 52.8 from last month’s 49.6. The employment index remained in contraction but was better than last month’s 48.3 reading. The price index remained unchanged at 53.
  • September’s nonmanufacturing ISM came in at 57.1, well ahead of consensus for 53.0 and hitting its highest level since October 2015. This follows directly on August’s 51.4 level, which was the lowest reading since February 2010.
  • Euro zone manufacturing PMI rose to 52.6 in September, its highest reading in three months, up from 51.7 in August. From 2007 until 2016, it has averaged about 50.0. U.K. manufacturing PMI rose to 55.4 in September from 53.4 in August.
  • U.K. housing prices decreasing 0.1% in the three months leading to September compared with the three months leading to June. Mortgage applications in the United States rose 2.9% in the week ended September 30th 2016 compared to the prior period.


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