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Weekly Update – September 14, 2018

  • Stocks around the globe posted gains, supported by net positive headlines. Investors liked that during the week the United States reached out to China to renew trade talks. On Friday, however, came reports that the Trump administration was still advocating a new round of tariffs, which somewhat dampened sentiment.
  • Nonetheless, the trend of strong U.S. data continued to undergird the global economic expansion. Various central banks announced policy decisions that gave the emerging markets a measure of relief and led the U.S. dollar to ease against a basket of currencies.
  • Oil was choppy, surpassing $71/barrel but ticking down to $69 as OPEC/Russian production continued to pressure prices. Gold prices spiked briefly but settled nearly flat on the week. U.S. Treasury yields were higher across the curve; the widely watched 10-year yield rose from 2.94% to 3.00%, effectively breaching a perceived resistance point.
  • August retail sales rose 0.1%, below expectations of 0.4% gain and July’s upwardly revised 0.7%. Sales at clothing stores and auto dealers were down; sales at restaurants and bars moderated.
  • The University of Michigan consumer sentiment index reached 100.8 in September, its second-highest reading since 2004. The release noted gains across all major socioeconomic subgroups, attributed to better prospects for jobs and income.
  • The NFIB Small Business Optimism index broke another record in August, riding enthusiasm for tax cuts and deregulation to a new 45-year high of 108.8.
  • Industrial production rose 0.4% in August, matching the upwardly revised July reading. By contrast, China’s August gain was only 0.1% and the eurozone contracted by 0.8% in July.
  • U.S. consumer prices increased by 0.2% in August, less than expected. Decreases in healthcare and apparel costs partially offset higher gasoline prices and rents.
  • The eurozone remained moody as Sentix investor sentiment dropped to 12.0 in September from 14.7 in August. The ZEW economic sentiment indicator turned less negative in September.
  • The central bank of Turkey raised rates to 24%, sending a message that it was serious about tackling inflation; the Turkish lira rose sharply as a result. The Bank of England and European Central Bank left key rates unchanged.

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