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A Macro View — Green Shoots in the Bond Market
Chart of the Week
- Initial jobless claims remained at a five-month high of 227,000 for the week ended November 16. Meanwhile, the four-week average for claims rose to 221,000, and continuing claims rose to 1.69 million. Despite the uptick in monthly claims, continuing claims remain near a 50-year low.
- Leading economic indicators for the US fell for the third straight month, according to the Conference Board, indicating slowing growth in the domestic economy. The index, which measures 10 metrics indicative of future economic growth, declined 0.1% in October. Higher jobless claims, lower manufacturing orders, and fewer hours worked all contributed to the low reading.
- Housing starts increased 3.8% month-over-month in October, but missed economists’ estimates. Construction on 1.314 million new homes began during the month, while private housing permits filed during the month reached a post-crisis high of 1.461 million—up 14.1% from last year.
- The Philadelphia Fed’s manufacturing index rose in November. Despite national weakness in manufacturing, evidenced by a downtrend in the ISM Manufacturing New Orders Index, manufacturers in the mid-Atlantic region expressed optimism about future orders.
- US equities traded down slightly on the week, following uncertainty in US-China trade talks as a result of tensions in Hong Kong.
- The yield on the 10-Year US Treasury Note declined from 1.83% at the start of the week to 1.76% as of midday Friday.
- The US dollar finished basically flat against a basket of currencies, sliding modestly from 97.99 to 97.91.
- WTI crude hit its highest level in a month on November 22, trading at $58.68/barrel as of midday Friday.
- October Federal Reserve minutes were more optimistic, citing easing, yet still elevated, geopolitical risks and trade tensions. Despite having cut the federal funds rate to a range of 1.5% - 1.75% at its late-October meeting, the central bank signaled a pause in rate cuts going forward.
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