The U.S. stock market rallied amid a tentative deal to avoid another government shutdown and optimism around a trade deal between the U.S. and China. Interest rates rose slightly as the 10-year treasury yield increased from 2.63% to 2.66%. The spread between the 10-year treasury yield and the 2-year treasury yield continues to remain steady at a very narrow 0.18%. Despite their typically inverse relationship, the price of gold rose 0.5% to $1,324.60 and the U.S. Dollar Index (DXY) rose from 96.62 to 96.92 as reports surrounding Brexit has triggered a pull back in other currencies. The price of crude oil jumped 5.8% to $55.80 a barrel as global production cuts and reduction in supply continues to drive the price higher.
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This Week’s Economic Highlights
- The Consumer Price Index (CPI), which measures the cost (inflation) of consumer goods and services, was unchanged for the month of January. However, core CPI, which excludes the volatile food and energy prices, rose 0.2% for a yearly increase of 2.2%.
- Initial unemployment claims increased by a moderate 4,000 to a seasonally adjusted 239,000 for the week ending February 9th. However, the less volatile 4-week moving average of initial claims continues to climb after the 50,000 jump two weeks prior. Continuing unemployment claims, which lag initial claims by a week, increased by 37,000 to 1.77 million.
- December 2018 retail sales data, which was delayed due to the government shutdown, dropped by a significant 1.2% for its biggest decline in nine years. Driving December retail sales lower was a 5.1% decline in gasoline sales and a 3.9% decline in e-commerce sales. January retail sales were also scheduled to be reported this week but have been delayed due to the government shutdown.
- The Producer Price Index (PPI), which measures wholesale prices (inflation), fell by 0.1% in January. The drop in the index was largely attributed to falling energy prices as gasoline prices dropped 7.3%. Core PPI, which excludes the volatile food and energy prices, rose 0.2% for a yearly increase of 2.5%.
- U.S. industrial production fell 0.6% in January for the first time in eight months. Despite the drop in industrial production, January’s production is still up 3.8% higher than it was a year ago.
“Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labor. It’s about stewardship and, therefore, about achieving the good society.”
– Robert J. Shiller