Chief Economist Scott Brown discusses the latest market data.
Stock market participants were encouraged by the sharp (but partial) rebound in retail sales in May, but discouraged by reports of increased cases of COVID-19 in a number of states.
Fed Chair Powell’s semiannual monetary policy testimony covered no new ground. Powell recognized recent signs of stabilization in the economy, but noted that “the levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery.”
Retail sales jumped 17.7% last month, down 6.1% from a year ago. Industrial production rose 1.4% in May, held down by lower output of utilities and a decline in energy exploration – manufacturing output advanced 3.8%, after falling 15.7% in April. The Conference Board’s Index of Leading Economic Indicators rose 2.8% in May, following -7.5% in March and -6.1% in April, led by lower jobless claims (in comparison to the elevated rate in April). Single-family building permits rose 11.9%, following a 33% decline over the two previous months. Jobless claims declined to 1.508 million in the week ending June 13 (still high), with continuing claims down only modestly in the previous week.
Next week, the third estimate of 1Q20 GDP growth is expected to be little changed (it was -5.0% in the second estimate). Durable goods orders should rebound in May, following large cancellations of aircraft orders in March and April, but watch shipments, which should give us a view of business fixed investment in 3Q20. Recovery rebate checks and deposits boosted personal income in April, even as wage income sank – we should see that reverse in May. Personal spending should have risen last month, echoing the bounce seen in retail sales (but note that two-thirds of consumer spending is services).
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.242||1.264|
|Dollars per Euro||1.121||1.123|
|Japanese Yen per Dollar||106.97||108.10|
|Canadian Dollars per Dollar||1.360||1.328|
|Mexican Peso per Dollar||22.753||19.016|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.30||1.37|
Treasury Yield Curve – 06/19/2020
As of close of business 06/18/2020
S&P Sector Performance (YTD) – 06/19/2020
|June 22||—||Existing Home Sales (May)|
|June 23||—||New Home Sales (May)|
|June 24||—||IMF World Economic Outlook (update)|
|June 25||—||Jobless Claims (week ending June 20)|
|—||Real GDP (1Q20, 3rd estimate)|
|—||Durable Goods Orders (May)|
|June 26||—||Personal Income and Spending (May)|
|—||UM Consumer Sentiment (June)|
|June 30||—||CB Consumer Confidence (June)|
|July 1||—||ADP Payrol Estimate (June)|
|—||ISM Manufacturing Index (June)|
|July 2||—||Employment Report (June)|
|July 3||—||Independence Day Holiday (observed)|
|July 29||—||FOMC Policy Decision|
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