INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Fed Signals Potential End to Rate Hikes
Personal Consumption Expenditures excluding food and energy (Core PCE) remains below the Fed’s target of 2.0%. The Fed’s preferred measure of inflation has risen little despite historically low unemployment levels. Headline inflation measures are also lower in line with falling energy prices.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Strong Consumer Spending Reflects Confidence
Consumer spending rose strongly in November, led by durable goods such as trucks and appliances. Consumer outlays are on pace for the best quarter of growth in four years. Growth in spending has been trending above income in 2018. This has resulted in the personal savings rate falling to 6.0%, the lowest monthly rate since March 2013.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Credit Market Concerns
The low interest rate environment has encouraged stock buy-backs and debt issuance resulting in higher leverage ratios. As the credit cycle turns, this increased leverage could trigger concerns regarding credit quality trends. Widening corporate bonds spreads have signaled real or perceived risk by the market.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
U.S. Economy Still Chugging Along
U.S. GDP growth remains solid with a reported 3.5% annualized growth rate during Q318 following a strong Q218 pace of 4.2%. Consumer spending and higher inventory levels contributed a substantial boost while lower net exports detracted from growth. Tax cuts continue to stimulate economic activity although we expect the impact to fade in upcoming quarters.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Will U.S. Stocks Continue to Rally?
U.S. stocks rallied in the 3rd quarter on strong growth and continued optimism. Meanwhile, U.S. stock market valuations (the price / earnings ratio) have been on the rise since April. This contrasts to other major markets in Europe and Asia where growth has been slower.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Rising Costs Impacting Home Sales
Rising home prices and higher mortgage rates appear to be impacting home sales nationally. According to a national home price index, home prices have increased by over 6.3% in the past year. Meanwhile, the US 30-year fixed mortgage rate has increased from about 4.0% a year ago to over 4.6% in August 2018.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
U.S. Deficits Fueling Increased Debt Issuance
Additional tax revenue from rising GDP in 2018 has failed to offset tax cuts and higher spending, resulting in wider deficits. To finance the growing deficits, the Treasury is boosting sales of Treasury bills, notes and bonds. Many analysts and investors forecast that these developments will lead to higher borrowing costs for the U.S. government.
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INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Inflation Expectations
The Federal Open Market Committee (FOMC) and the markets continue to provide divergent views on where short-term rates are headed. By 2020, FOMC projections show rates near 3.50% while the market expects overnight rates to rise only to about 2.50%. So what is making the Fed continue to tighten policy when growth remains well below pre-crisis levels?
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Steady Economic Growth
The US economy maintained a steady pace of growth during the first quarter. GDP rose at an annual rate of 2.2% driven by business investment and consumer spending. Improvements stemmed from income tax cuts and a strong labor market. Q1 2018 Consumer spending rose 1% following a robust 4% in Q4 2017.
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Fed Prepared for Inflation Over 2% Target
Growth in Personal Consumption Expenditures (PCE) is the Federal Reserve’s preferred measure of inflation. PCE rose 2.0% in March, which was the first time in more than a year that it was on target. Excluding food and energy costs, prices rose 0.2% in March from February and were up 1.9% for the year.
