Stocks and Bonds Gain on Weak Economic Data

The Dow (+2.2%), NASDAQ (+1.1%) and S&P 500 (+1.9%) exhibited strong gains for the week.  Meanwhile, taxable bonds gained 0.1% and tax-free municipal bonds gained 0.5%, as the 10-year Treasury yield remained flat at 4.50%.  I like when it’s green across the screen!  Or, as one client keeps telling me, “Put your red pen away!”

There was very little economic data reported last week except for the weekly initial jobless claims and the University of Michigan consumer sentiment surveys, both of which were weak.  Jobless claims came in higher than expected and consumer sentiment fell for both current conditions as well as future expectations.  That turned out to be examples of bad news is good news, especially with the jobless claims.  Why?  Because Fed Chairman Jerome Powell once stated that the labor market represents 55% of inflation, so a weaker job market may be offering signs that inflation may be under less pressure.  However, that one data report comes after a slew of inflation data that was far less encouraging. 

Contrary to last week’s light set of data, we will be receiving four important monthly economic data reports this week, in addition to the weekly jobless claims.  Two key inflations reports – Consumer Price Index (CPI) and Producer Price Index (PPI) along with retail sales will be reported on Tuesday and Wednesday, and then Leading Economic Indicators (LEIs) will be reported on Friday.  In short, investors will be closely watching this week’s data, and that could drive the markets to be more volatile this week than normal.

_{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

_{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}