Weekly Market Commentary As of September 26th, 2014 The Economy U.S. productivity continued to make gains and consumers maintained a positive outlook despite unimpressive housing- market developments. Overseas, the U.K. retail sector held strong, while eurozone economic activity appeared to decelerate. SEI anticipates measured global economic growth for some time. The U.S. economy grew at a 4.6% annualized pace during the second quarter, based on an upward adjustment in the final reading. Core consumer-price increases were unchanged at an annualized 2% rate. Orders for durable goods dropped in August, as expected. The core figure, which excludes volatile transportation-related orders (such as aircraft), rose by 0.7% from July. A preliminary survey by Markit showed strong manufacturing growth for September. The services sector also expanded, but at a slower pace compared to the previous month. Sales of existing homes fell by 1.8% in August, while new-home sales outpaced growth expectations. Supply remained tight in both categories. Rising home prices slowed, according to the Federal Housing Finance Agency. A disappointing 0.1% increase in July brought the year-over-year change down from 5.1% to 4.4%. Initial jobless claims rose slightly, to 293,000 from 280,000, for the week ending September 20. Ongoing unemployment claims, reflecting delayed data, rose for the week of September 6, but both measures remain near post-recession lows. Consumer sentiment held firm in September, according to the University of Michigan, remaining at the highest level in more than a year. U.K. retailers showed optimism in September, as volumes gained compared to the same month a year earlier (although not by as much as the one-year period ending August). Advances were consistent across sectors amid a positive reading on new orders. Eurozone purchasing managers reported a slowing expansion of economic activity for the month to date. The services sector fell further, albeit from a higher starting point. Manufacturing descended toward breakeven levels, as new orders contracted. September consumer confidence in the eurozone disappointed, with the worst reading since winter, as it declined further into negative territory. The figure nevertheless remained above its long-term average. China’s manufacturing sector inched higher in September after falling in the previous month, according to a preliminary survey. New orders, both domestic and external, contributed to the improvement. A preliminary report indicated that Japanese manufacturing grew at a slower rate in September. The country’s year-over-year consumer-price increases moderated in August. Economic Calendar September 29: Personal Income & Outlays, Pending Home Sales September 30: Case-Shiller Home Prices, Consumer Confidence October 1: ISM Manufacturing, Motor Vehicle Sales October 2: Jobless Claims, Factory Orders October 3: Employment Situation, ISM Non-Manufacturing Stocks Global equity markets fell for the week. In the U.S., all sectors were negative. Consumer staples and health care outperformed, while industrials and energy underperformed. Growth stocks beat value stocks and large- company stocks led small-company stocks. Bonds Global bond markets rose for the week. Global government bonds outperformed, followed by corporate bonds. High-yield bonds lagged. Intermediate- and long-term U.S. Treasury yields fell this week, while short-term yields were mixed, as legendary investor Bill Gross announced his departure from the helm of the world’s largest bond mutual fund.
Posted on: Mon, 29 Sep 2014 21:52:07 +0000
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