The Market Week In Review - Week Ending Oct. 11, 2019

The U.S. stock market ended the week higher as the U.S. and China reached a partial trade deal that could potentially broker a truce in the trade war. Interest rates also jumped higher as the 10-year treasury yield went from 1.52% last week to 1.75% today after the Fed announced that they will start to buy back treasury bills next week in order to mitigate the risk of money market pressures. The news of a partial trade deal between the U.S. and China also sent the price of gold lower as it dropped 1.4% to $1,489 an ounce. Meanwhile, an attack on an Iranian oil tanker sent the price of crude oil up to $54.78 a barrel, 3.5% higher than it was a week ago.

This Week's Economic Highlights

• The Producer Price Index (PPI), a measure of wholesale inflation, fell by 0.3% in September as it continues to trend lower. Over the past year PPI has risen at 1.4%, its slowest rate in three years. However, core PPI (which excludes the volatile food and energy prices) has risen at a relatively stronger 1.7%.
• The minutes from the Federal Open Market Committee (FOMC) September meeting showed that the Fed became more worried about the economy as they cut rates by another quarter of a percent. The minutes also showed discussions of a possible recession, with some Fed officials noting that the probability of a recession has “increased notably in recent months”.
• Initial unemployment claims fell by a relatively steep 10,000 to 210,000 for the week ending October 5th. However, the more stable four-week average of initial claims actually rose by a slight 1,000 to 213,750. Continuing unemployment claims, which lags initial claims by a week, increased by 29,000 to 1.68 million.
• The consumer price index, a measure of retail inflation, was unchanged for the month of September. However, core CPI (which excludes the volatile food and energy prices) rose by a slight 0.1%. Over the past year, CPI has risen at a relatively low 1.7% while core CPI has risen at a relatively high 2.4%.

Quote

“We always mistake luck for skill in bull markets.  Skill is best reflected in limiting downside in bear markets.”

– D. Muthukrishnan