Weekly Update 12-05-2016

The S&P 500 price return as of December 9 was up 5.6% since the election and 10.55% for the year to date. The yield on the 10-Year Treasury also rose again last week finishing at 2.46%. The week ahead will be busy and includes the Fed’s FOMC meeting on Tuesday and Wednesday. We remain focused on the impact current data and decisions will have on long-term risk and returns.

What We Are Watching So You Don’t Have To

 On The One Hand

  1. The ISM Non-Manufacturing Index was reported at 57.2 for November, up from 54.8 in October.
  1. The Q3 productivity revision was unchanged at 3.1%, unit labor costs were revised upward to 0.7% from 0.3%.
  1. New orders for manufactured goods increased 2.7% in October on top of an upward revision of September orders to an increase of 0.6%.
  1. Consumer credit increased by $16.0 billion in October after an upwardly revised $21.8 billion in September.
  1. Initial unemployment claims for the week ending December 3 decreased by 10,000 to 258,000. Continuing claims for the week ending November 26 declined 79,000 to 2.005 million.
  1. The University of Michigan Consumer Sentiment Index for December was reported at 98.0, up from the final November reading of 93.8.

On The Other Hand

The trade deficit widened to $42.6 billion in October from an upwardly revised $36.2 billion deficit in September. October exports were $3.4 billion less than September exports and October imports were $3.0 billion higher than September imports.

All Else Being Equal

The upward revision to unit labor costs, the result of an increase in hourly compensation, can provide a boost to consumer spending but it also cuts into corporate profits. We view this as a plus at this point in the economic cycle. Consumers are optimistic. Economic expansion continues.

Last Week’s Market


The Week Ahead