In this week’s recap: stocks slump as the 10-year Treasury
yield spikes, an ISM index hits a historic peak, job creation weakens, and oil extends
its winning streak.
Weekly Economic Update
Presented by Troy L Thompson, CFP, October 10, 2018
10-YEAR
TREASURY YIELD HITS A 7-YEAR PEAK
Friday, the yield on the
10-year note reached 3.23%, its highest level since 2011. Its yield rose
dramatically last week, influenced by hawkish comments from Federal Reserve
chair Jerome Powell and reports showing minimal unemployment and a swiftly
expanding business sector. All this strengthened investor perception that the
U.S. economy has hit its stride. It also suggested a near future with recurring
interest rate hikes, costlier borrowing, and subdued spending. That
possibility weighed on equities. For the week, the Nasdaq Composite fell 3.21%
to 7,788.45, and the S&P 500, 0.97% to 2,885.57; the
Dow Industrials retreated just 0.04% to 26,447.05.1,2
LESS
HIRING IN SEPTEMBER
A look at the Department of Labor’s latest jobs report reveals
good news and bad news. The good news? Unemployment declined further to 3.7%,
annualized wage growth improved to 3.4% in the third quarter, and monthly net
hiring averaged 190,000 in Q3. The bad news? Payrolls expanded with just
134,000 net new jobs last month, as underemployment ticked up 0.1% to 7.5% and
year-over-year wage growth slowed to 2.8%. Some economists feel that Hurricane
Florence significantly impacted the September data.3
SERVICE
SECTOR EXPANDS AT A HISTORIC PACE
The Institute for Supply Management said its non-manufacturing
purchasing manager index rose 3.1 points in September to 61.6. It has never
been that high in its decade-long history. ISM’s PMI for the factory sector
took a slight dip in September, slipping from 61.3 to 59.8 but still showing
fast expansion.4
OIL
MAKES ANOTHER WEEKLY ADVANCE
Crude is on a 4-week winning streak. At Friday’s closing bell, the
price stood at $74.34 a barrel on the NYMEX, reflecting a 1.5% rise in five
days. Again, worries over upcoming U.S. sanctions against Iran helped to send
prices higher. WTI crude settled at $76.41 Wednesday, which approached a 4-year
peak for the commodity.5
T I P O F
T H E W E E K
Yes, clipping coupons can save you money at the grocery store – but keep in mind, coupon deals may lead you to buy unneeded items. The cost of the extra purchases could cancel out any coupon savings.
THIS WEEK
While the U.S. bond market is closed Monday
in observance of Columbus Day, U.S. stock exchanges are open for business; no
major economic or earnings releases are scheduled. | Nothing major is slated
for Tuesday, either. | Wednesday, investors consider the September Producer
Price Index and earnings from Fastenal. | On Thursday, the September Consumer
Price Index appears, along with the latest initial jobless claims report and earnings
news from Delta Air Lines and Walgreens Boots Alliance. | The fall earnings
season begins Friday, with announcements from Citigroup, JPMorgan Chase, PNC
Financial Services Group, and Wells Fargo; in addition, the University of
Michigan’s preliminary October consumer sentiment index arrives.
Q U O T E O F T H E W E E K
“Success is the maximum utilization of the ability that you have.”
Zig Ziglar
%
CHANGE
|
Y-T-D
|
1-YR
CHG
|
5-YR
AVG
|
10-YR
AVG
|
DJIA
|
6.99
|
16.12
|
15.09
|
16.57
|
NASDAQ
|
12.82
|
18.27
|
20.91
|
31.81
|
S&P
500
|
7.93
|
13.07
|
14.14
|
17.30
|
REAL
YIELD
|
10/5
RATE
|
1 YR
AGO
|
5 YRS
AGO
|
10
YRS AGO
|
10 YR TIPS
|
1.07
|
0.49
|
0.46
|
2.21
|
Sources: wsj.com, bigcharts.com, treasury.gov - 10/5/182,6,7,8
Indices are unmanaged, do not incur fees or
expenses, and cannot be invested into directly. These returns do not include
dividends. 10-year TIPS real yield = projected return at maturity given expected
inflation.
T H E W E E K L Y
R I D D L E
LAST
WEEK’S RIDDLE: What can be broken, but should not be forgotten?
ANSWER:
A promise.
Troy L Thompson, CFP may be
reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA: Thompson Financial, Inc.
and Hanson Asset Strategies
Securities offered through
FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with
FIRST HEARTLAND CAPITAL, INC.
This material was prepared by MarketingPro, Inc., and does
not necessarily represent the views of the presenting party, nor their affiliates.
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CITATIONS:
1 - thestreet.com/markets/stocks-rise-slightly-on-friday-after-september-jobs-report-14735092
[10/5/18]
2 - markets.wsj.com/us [10/5/18]
3 - bloomberg.com/news/articles/2018-10-05/u-s-payrolls-and-wages-cool-while-jobless-rate-hits-48-year-low
[10/5/18]
4 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30177
[9/26/18]
5 - marketwatch.com/story/us-oil-benchmark-ends-nearly-flat-but-tallies-a-4th-straight-weekly-rise-2018-10-05
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F5%2F17&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F5%2F17&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F5%2F17&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F4%2F13&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F4%2F13&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F4%2F13&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F6%2F08&x=0&y=0
[10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/5/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/5/18]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/5/18]
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