Clarksville, TN – The economic data were consistent with a lackluster to moderate pace of growth in the near term. Retail sales disappointed, reflecting strength in autos and lower gasoline prices (but a modest trend otherwise). Industrial production was a little soft.
The Producer Price Index showed downward pipeline pressures, and the Consumer Price Index was mixed (reflecting lower energy prices, but some pressure in shelter costs). Excluding food and energy, the CPI rose 0.2% (+1.9%), but if you also exclude shelter, core inflation would have been 0.1% (+1.0% y/y).In public speeches, two Fed governors suggested that it would be more appropriate for policymakers to delay the initial increase in short-term rates, and the week’s economic data seemed to support that sentiment. The market now sees the Fed waiting until March.
Treasury Secretary Jack Lew sent a letter to Congressional leaders advising them that the drop dead date for raising the debt ceiling will be November 3rd, two days earlier than previously projected.
Next week, the economic calendar thins out somewhat. China will report its third quarter GDP number on Sunday evening (Monday morning in Beijing). The country hit its 7% growth target in both 1Q15 and 2Q15, but does anybody believe these numbers? Investors will be looking for whether the Chinese government recognizes the slowdown (or lowers the growth target).
U.S. housing figures are often uneven from month to month, but we should see strength in homebuilding and sales. Earnings reports are expected to drive the stock market, and the bond market is likely to react to the stock market action. Congress will be back in session, hopefully working on an agreement to raise the debt ceiling.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.550||1.594|
|Dollars per Euro||1.140||1.279|
|Japanese Yen per Dollar||118.400||105.820|
|Canadian Dollars per Dollar||1.286||1.129|
|Mexican Peso per Dollar||16.365||13.579|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||3.18||3.51|
Treasury Yield Curve – 10/16/2015
As of close of business 10/15/2015
|Oct 18||—||China GDP (3Q15)|
|Oct 19||—||Homebuilder Sentiment (October)|
|Oct 20||—||Building Permits, Housing Starts (September)|
|Oct 22||—||Jobless Claims (week ending October 20)
Existing Home Sales (September)
Leading Economic Indicators (September)
|Oct 26||—||New Home Sales (September)|
|Oct 27||—||Durable Goods Orders (September)
Consumer Confidence (October)
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.
Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business October 15th, 2015.