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DATAINTERPRETATION.docxDATA INTERPRETATION
Week Ending September 28th, 2018
Week 1
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
The consumer confidence index continued to rise sharply, reaching a new high in 18 years. Interest rates rose slightly before the Federal Open Market Committee raised interest rates. After the FOMC announced the results, the stock market reversed and the Dow Jones index fell 0.4% to 26,385 points.
GDP
According to the third estimate of GDP for the second quarter, it is basically the same as the second forecast. The overall annual growth rate is 4.2%, and consumer spending is 3.8%.
Jobless Claims
In this week, the actual new claims level is 214k and it increased 13k from last week. The actual 4-week moving average didn’t increase to much and it is 206.25k. Affected by the hurricane, the Carolina claim rate rose to 12,000, reaching 214,000, lower than Econoday's consensus. The number of first-time applicants in North Carolina increased by 8,000 to 10,209, and South Carolina increased by nearly 1,900 to 3,362.
Consumer Confidence
In the September report, consumer confidence rose sharply to 138.4 and exceeded Econoday's consensus to reach the highest data in 18 years. For future estimates, revenues for the next six months may fall, but plans to buy homes and cars will rise.
New Home Sales
In August, the annual New Home Sales was 629k. The supply of new homes rose by 1.6% and there are still 318,000 new homes for sale. Sales speed is 6.1 to 6.2 months.
Wall Street Journal
Bond Yields
According to the article from Wall Street Journal, the yield of 10-year U.S. Treasury note has Continued grow up to 3.11% and is close to the highest in 7 years. The rise in yields is based on investors’ increased interest in add risk. In the picture below we can see the rising trend of this year's 2-year treasury note and 10-year treasury note. As of September, 2-year Treasury yields have grown faster than the 10-year yield. This reflects the narrowing of the gap between short-term and long-term interest rates, called the flattened yield curve.
Federal Reserve
The Federal Reserve Bank said it would raise short-term interest rates by another 25 percentage points. In the seven years prior to December 2015, the federal-funds rate has been 0%. It has risen slowly since December of 15 and broke 2% this year. Relevant personnel said that in order to prevent the economy from overheating, the federal-funds rate may continue to grow until 2020, which is expected to reach 3.4%.
Week Ending October 5th, 2018
Week 2
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
This week, the US-Canada trade agreement increased North American vehicle content and the US opportunity to enter the Canadian dairy market. The stock market rose and the Dow rose 0.7% to 26,651. Because Iran’s decline in oil exports led to an increase in oil prices of more than $2 to $75.50, reaching a four-year high. However, gold has risen strongly to $1,200 to $1,205. The Dow Jones index rose 0.7% to 26,773, setting a new record. To prevent inflation, the risk of a Fed rate hike this week has increased. Treasury bonds fell sharply, 2-year Treasury yields rose to 2.87%, while 10-year Treasury yields rose to 3.16%.
Jobless Claims
The actual new claims level is 207k in this week and it decreased 7k from prior week. The consensus Range is 210k to 220k. Hurricane Florence and the floods in Carolina did not have a big impact on jobless claims. The number of people applying for jobless claims for the first time this week fell by 8,000 to 207,000, which is within Econoday’s consensus range. The 4-week average for continued applications fell by 13,000, currently at 1.665 billion, is the lowest in 45 years.
Wall Street Journal
Foreign exchange rate:
From this week's data, the dollar's decline against other countries' currencies means a depreciation of the dollar. From the previous market Reflections, we can see that the biggest reason for the dollar's depreciation is trade. Beginning in early October, President Trump imposed tariffs on $200 billion in Chinese goods. The US dollar index broke above 95.75. Also, because President Trump’s sanctions against Iran have caused oil prices to rise, this is one of the reasons for the depreciation of the dollar.
10-Year Treasury Note:
Benchmark 10-year Treasury yields and many other borrowing costs associated with common mortgage rates have recently reached a new seven-year high. This is the Federal Reserve's three major policy rates this year.
Week Ending October 12th, 2018
Week 3
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
President Trump largely accepted criticism of the Fed and called it a rate hike plan. But this news does not help the stock market. The Dow closed down 0.2% to 26,431 and Nasdaq closed at 7,738 due to higher interest rates. This week's bond yields have remained basically unchanged, but stocks have sold a large portion of recent gains. The Dow fell 3.2% and the Nasdaq fell 4.1%. Oil surrendered to $2, close to $73. Gold is also stable below $1,200.
Jobless Claims
The actual new claims level is 214k in this week and it increased 7k from prior week. The consensus Range is 200k to 210k. The 4-week moving average increase a little bit to 209.50k. The first jobless claims caused by the hurricane rose slightly, and it rising 7,000 to 214,000. The 4-week average rose by 2,500 to 209,500, a little higher than last month.
CPI
This week's report shows that consumer prices are very low. In September, the CPI only rose by 0.1%, overall 2.3%. The pre-energy food core interest rate is also 0.1%, overall 2.2%. A 0.5% energy decline per month indicates a drop in gasoline and electricity and a lower overall tax rate. As new car prices fell 0.1% this month, used cars fell by 3.0%. Housing only increased by 0.1%
Wall Street Journal
Equity indexes:
This week, both u.s. stock market and international stock market performed very poorly. All stocks are in a downward trend. The world's major stock market, the highest valuation is the US stocks. The S&P 500 index has reached a 25-fold P/E ratio this year and has entered an over valuable area. It fell a lot this week and fell back to 24 times P/E. US stocks are undervalued, and any negative factors will trigger a correction, such as the mid-term elections, the rise in US bond yields, and the more aggressive Fed rate hike policy.
Week Ending October 19th, 2018
Week 4
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
Stock trading suddenly soared on Tuesday, the Dow soared 2.2% to 25,798. The yield on the 10-year government bond yield has barely changed, at 3.16%. The US dollar index has barely changed to 95.05. However, on Wednesday, the stock market was lower at the end of the day due to a few basis points and interest rate hikes. The Dow fell 0.4% to 25,076.
Jobless Claims
The actual new claims level is 210k in this week and it decreased 5k from prior week. The consensus Range is 210k to 217k. The 4-week moving average increase 2,000 to reach 211.75k. The number of jobless claims affected by the hurricane this week has not been noticeable in the past few weeks.
Existing Home Sales
The demand for housing is currently in a very good state. Sales of existing homes fell by 3.4% in September, reaching the low end of the Econoday consensus. In terms of the sales price of existing houses, it fell 2.8% to US$258,100. Comparing the year-on-year price, plus 4.2% of the price and sales rate, it is negative 4.1%. While the growth of the stock market and consumer confidence has had a positive impact on home sales, the lack of wage growth is negative for homebuyers due to the scarcity of available labor.
Wall Street Journal
VIX Index:
Since the VIX rose sharply to 25 last weeks, this week's VIX index dropped to 20. As stock prices continue to fall, the index tracking the industry's volatility climbed for the third consecutive week, the longest consecutive gain since February.
Week Ending October 26th, 2018
Week 5
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
This week, the Dow fell 0.5% to 25,191 points after being hit by a sharp fall in the Chinese market. However, the stock market rebounded from a low level and interest rates fell slightly. Money fell 6 basis points to 3.10% compared to the 10-year US Treasury yield.
Jobless Claims
The actual new claims level is 215k in this week and it increased 5,000 from prior week. The consensus Range is 205k to 220k. The 4-week moving average did not change at this time. The unemployment rate of insured personnel fell by only 1.1%. Continuing claims, after last week, fell 5,000 to a new 45-year low of 1.63 million.
GDP
The real GDP decreased from 4.2% to 3.5%, which is 20% higher than Econoday's forecast. The biggest problem of the quarter was trade. The net export deficit increased by $99 billion this quarter, bringing GDP down by 1.8 percentage points. The consumer spending change from 3.8% to 4.0%.
New Home Sales
The new home sales decrease 5.5% in this period; it decreases from 629k to 553k which is far below Econoday's consensus range. The housing data is very unstable, and the sales of new homes that are not available are declining this year. The price of the house was basically flat this month, only rising by 0.3%. The real estate industry is currently in a weak period.
PMI Composite
This month, both PMI manufacturing and PMI service sample growth increased slightly, bringing the PMI Composite Index up 1.4 points to a higher than expected 54.8.
Wall Street Journal
U.S. stock
On October 25, US stocks plunged again in panic. The Nasdaq Composite Index fell 4.43% to 7108.40 points, the biggest one-day drop since August 2011. The Dow fell 608.01 points, down 2.41% to close at 24,583.42 points, and all the gains in 2018 have been erased.
Week Ending November 2nd, 2018
Week 6
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
This week, employee wages and salary growth were limited, but consumer spending continued to grow. President Trump's trade agreement with China has boosted the stock market. The Dow Jones index rose 1.8% to 24,874. The US dollar index rose 0.3% to 96.98.
Jobless Claims
The actual new claims level is 214k in this week and it decreased 2,000 from prior week. This is very healthy for the labor market. The consensus Range is 209k to 215k. The 4-week moving average increase 2000 reach to 213.75k.
Employment Situation
The number of non-agricultural employment in October increased by 250,000, exceeding expectations. However, the labor force in the construction industry is scarce. The unemployment rate remained at a low level and a favorable 3.7%, and the labor participation rate increased by 20% to 62.9%.
PMI manufacturing
The overall growth of the PMI manufacturing sample in October was stable and stable at 55.7. New orders have increased significantly and are at a five-month high.
Consumer Confidence
In October, the consumer confidence index was 137.9 and remained near the 18-year high. At present, the employment prospects are very good, and the growth rate of employment opportunities is 22.1%. The percentage of revenue growth rose by 2.2 percentage points to 24.7%.
Wall Street Journal
EMBI Global Index
The EMBI Global Diversification Index fell 2.16% in October, which is the negative yield for the 7th month of 2018. Although the rise in US Treasury yields has also dragged down returns, most of the negative yields in October were driven by spreads.
U.S. Dollar
Recently, the value of the dollar has strengthened. The continued trade negotiations between China and the United States and the loose monetary policy have devalued the renminbi. The exchange rate of the RMB against the US dollar reached its lowest level in more than a decade.
Week Ending November 9th, 2018
Week 7
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
The headline news this week is the midterm election. Because the expected voter turnout rate will change the balance of power in Congress, it is also a national referendum for President Trump. After the election results were announced on Wednesday, the Republican Party continued to control the Senate, and the Democratic Party gained control from the House of Representatives. This is the same as most people expect. But many investors believe that this result may lead to fiscal tightening, but it is beneficial to both stocks and bonds.
Jobless Claims
The jobless claims down 1,000 in this week and approach historic low. The number is 214,000. Compared to last week, the 4-week average has not changed, it is still 213.75k. But compared to the data in early October, the 4-week average increased by 4,000.
Wall Street Journal
Inflation
Affected by rising energy prices, inflationary pressures in the United States have risen markedly. Since the beginning of this year, the US CPI has been increasing by more than 2% year-on-year. Japan’s inflation rate has been below 2%. The inflation rates in major emerging markets such as Russia, India and Brazil are basically stable and controllable, and they are completely free from high inflationary pressures.
Stock Market
Week Ending November 16th, 2018
Week 8
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
In this week, in order to prevent inflation, the Federal Reserve may be to raise interest rates to keep inflation flat. The Dow ended a four-session losing streak with a 0.8 percent gain to 25,289.
Jobless Claims
The actual new claims level is 216k in this week and it increased 2,000 from prior week. The consensus Range is 210k to 215k. The 4-week moving average increase 1,500 to a 215,250 level. However, the continuing claims increase 46,000 and it is much higher than before.
CPI
According to the report, energy prices rose by 2.4% in October, while gasoline prices rose by 3.0%. However, due to the decline in oil prices, the November data will definitely decline. For housing, Rents rose by 0.2%. Clothing rose by 0.1%. But the price of food and new cars has fallen.
Wall Street Journal
10- Year Japanese Government Bond
The benchmark 10-year Japanese Government Bonds yield has climbed to around 0.08 percent, after crossing into positive territory in mid-November. Bond yields are inversely proportional to prices. The Bank of Japan policy uses the yield curve control as a monetary policy tool to set the benchmark bond's target rate of return to zero.
Week Ending November 23rd, 2018
Week 9
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
The housing market is not doing well this year. After the housing market index declines this week, it is likely to continue to fall to the end of this year. Oil is the focus of this week. After President Trump stood in Saudi Arabia despite the killing of Jamal Khashoggi, the oil prices fell by $4.
Jobless Claims
This week, initial jobless claims increased significantly. The data shows that jobless claims increased from 216k to 224k which is 9,000 above Econoday's consensus and outside Econoday's consensus range. The consensus Range is 210k to 220k. The 4-week moving average increase 3,2500 to a 218,500 level. However, there is no reason can explain why the data increase a lot in this week.
Existing Home sales
In October, the annualized rate of existing home sales was 5.22 billion, higher than the expected 5.21 million. And in the wake of the hurricane in October, sales in the South increased by 1.9%. Sales in the western region increased by 2.8%, 1.5% in the Northeast, and negative 0.8% in the Midwest. However, the supply of existing homes fell by 1.6% in October.
PMI Composite
From this week's perspective, both PMI manufacturing and services are growing slowly. The manufacturing industry has fallen sharply but is currently in a relatively stable state due to the growth of orders.
Wall Street Journal
Trade War
Since 2018, the fundamentals of the US economy have remained stable, and inflationary pressures have fallen slightly. The scale of foreign trade continued to expand, but the trade deficit reached a seven-month high, which led to a unequal financial situation and a high level of government debt. The G20 summit in Argentina provides an important opportunity for China and the United States to ease trade tensions. It is recommended to strengthen special meetings with high-level Americans, expand the import of key products from the United States, jointly promote the reform of the World Trade Organization, and continue to deepen cooperation in the field of intellectual property to ensure Sino-US cooperation.
Week Ending November 30th, 2018
Week 10
Economic indicators/Announcements (Bloomberg Calendar)
Market Reflections
From this week's report, the deepening of the trade deficit in October led to a decline in GDP in the fourth quarter. Corporate profits have risen, but government revenues have fallen.
Jobless Claims
This week, Initial jobless claims continued to increase by 10,000 to 234,000. This is the third consecutive week of Initial claims growth. The consensus Range is 210k to 228k.The 4-week average has risen by 4,750 to 223,250.
GDP
During the quarter, GDP remained at 3.5% and did not change much. However, Consumer Spending fell by 0.4% to 3.6%. The main reason is that the reduction of the housing market has led to a decline in Consumer Spending.
New Home sales
Since November last year, new home sales have continued to decline until now. It has fallen by 12% throughout the year. This is not a very good phenomenon for the real estate industry. Moreover, house prices have also fallen by 3.6%. At present, by the end of 2018, the real estate industry has not rebounded.
Consumer confidence
In November, the consumer confidence Index is 135.7k and it decrease a little bit from last month. Interest rate expectations continue to rise by 1.2 points to 74.4%. Higher interest rates mean higher mortgage rates, but this does not help the home purchase plan.
Wall Street Journal
Crude oil: Throughout November, crude oil prices fell by 22%, the largest decline in a decade. The main reason is that traders are worried about the global supply of crude oil due to possible oil production cuts.
