The U.S. stock market finished the week higher amid the Fed’s decision to leave interest rates unchanged and reports of overall positive corporate earnings. Interest rates dropped as the 10-year treasury yield fell from 2.75% last week to 2.69% this week. However, the spread between the 10-year treasury yield and the 2-year treasury yield widened by 2 basis points to 0.18%. The price of gold jumped 1.5% to $1,322 an ounce while the U.S. dollar index decreased from 95.81 to 95.61 amid the Fed’s decision to hold interest rates steady. The price of crude oil jumped 3.40% to $55.37 a barrel and is up 18% for the month of January as global outages and OPEC production cuts begins to alleviate concerns on oversupply.
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This Week’s Economic Highlights
- GDP for the fourth quarter of 2018 has been delayed due to the government shutdown. However, forecasters are expecting its annualized rate to drop from 3.4% to 2.7%.
- The Federal Reserve Open Market Committee unanimously voted to leave the federal funds rate range of 2.25% to 2.50% unchanged. Fed Chairman Jerome Powell stated that the case for further rate hikes has “weakened” because of a moderate slowdown in U.S. economic growth.
- After reaching a 49-year low the prior week, initial unemployment claims jumped a significant 53,000 for the week ending January 26th, reaching a 16-month high of 253,000. Continuing unemployment claims, which lag initial claims by a week, rose by 69,000 to a total of 1.78 million.
- Personal income and consumer spending data for the month of December has been delayed due to the government shutdown. However, forecasters expect personal income and consumer spending to rise 0.5% and 0.3%, respectively.
- New home sales for November of 2018, which were previously delayed by the government shutdown, rose a significant 17%. However, new home sales are still down 7.7% from a year ago. The median sales price of newly constructed homes is down 12% from where it was a year ago, settling at $302,400.
- The U.S. added 304,000 jobs in January of 2019, its largest increase in nearly a year. Meanwhile the unemployment rate increased from 3.9% to its 7-month high of 4.0% as the government shutdown left government employees without a paycheck.
“As I have earlier noted, the most important things in life and in business can’t be measured.”
– John C. Bogle, Enough: True Measures of Money, Business, and Life.