Stocks indices ended a volatile week lower as fears over rising long term interest rates and possible inflation later this year outweighed good economic data. The MSCI Emerging Markets Index saw the biggest decline. Everything from consumer spending and durable goods orders to first time claims for unemployment saw improvements. Even the moribund energy sector saw a rebound in prices as the Texas energy crisis brought inventories of crude oil and natural gas down to or below their five year averages.
Treasury yields rose with the 30-year bond yield closing at 2.152% and the 10-Year note closing at 1.415%. Crude oil rose to $61.66 a barrel while natural gas fell to $2.811 per MMBTUs. The U.S. dollar index rose to 90.93 and gold fell to $1733.00 an ounce.
In the economic numbers this week:
- The S&P CoreLogic Case-Shiller National Home Price index in December was 10.4% higher than a year earlier.
- The Commerce Department reported
- New home sales rose 4.3% in January to a record for the month of January. The median new home price rose to 5.3% to $346,400.
- Durable-goods orders rose 3.4% in the month of January, the ninth consecutive month of gains.
- Excluding transportation, durable goods orders rose 1.4% in January.
- New orders for defense aircraft and parts rose 63.5%
- New orders for nondefense capital goods excluding aircraft, a proxy for business investment, rose 0.5%.
- Household income rose 10% in January, the second largest monthly jump in history, on the heels of December’s $600 stimulus payments and enhanced unemployment.
- Personal consumption expenditures rose 2.4% in January.
- The price index for personal consumption expenditures rose 0.3%. Excluding volatile food and energy prices also rose 0.3%. Both measures increased 1.5% from a year ago. This is the preferred measure of inflation by the Federal Reserve whose stated goal is an average of 2.0%.
- The personal savings rate rose to 20.5% of income in January as many consumers saved a good portion of stimulus and enhanced unemployment.
Source: Commerce Department
- The Labor Department reported:
- A seasonally adjusted 730,000 workers filed initial claims for unemployment in the week ending February 6th. This was an decrease of 111,000 from a revised 841,000 the week before.
- The 4-week moving average, designed to smooth out volatility, was 807,500, a decrease of 20,500 from the previous week’s revised average.
- Continuing claims fell from a revised 4.5MM to 4.4MM in the week ending February 13th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs rose from 18.3MM to 19.0MM the week ending February 6th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil fell from 10.8MM barrels per day to 9.7MM BPD.
- Natural gas storage fell 338BN cubic feet and is below the average level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 4 to 309. The number of active natural gas rigs rose 1 to 92.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.