WEEKLY CAPITAL MARKET HIGHLIGHTS:
- US equity markets rose moderately, pushing major benchmarks into record territory, including a 24th record high for the Dow. Emerging markets also ticked higher, as contributions from China and Russia aided performance.
- The Treasury yield curve flattened marginally, despite the yield on the 10-year note edging up to 2.35% on Thursday. This is still lower on the year, however, as the Fed’s more dovish tone has made investors cautious of a potentially more conservative pace of US rate hikes.
- Commodities remained relatively flat, with the Bloomberg Commodity Index finishing slightly lower after an up-and-down week. Crude oil has advanced over four consecutive days, extending the week’s gain to 4.2%, as the global demand outlook improves.
- The US Dollar ended the week lower against a basket of major trade partners’ currencies, reversing earlier gains and hitting an 8-month low. The dollar fell after Fed Chair Yellen’s comments on inflation, calling investors to lower expectations on the pace of US rate increases, as well as concerns spurred by emails between President Donald Trump’s son and a Kremlin-linked lawyer, reigniting collusion speculation.
- In other economic news: Consumer spending has been modest, but consumers did run up their credit-card debt in May, helping to lift consumer credit outstanding by a larger-than-expected $18.4 billion. Credit card debt may not be a plus for long-term consumer health, but it is one for near-term consumer spending and gross domestic product (GDP).
- Janet Yellen Speaks. Federal Reserve Chair, Janet Yellen, conceded that wage pressures are weak but warned it’s premature to conclude that inflation trends are falling back below 2%. She repeated that inflation is being held down by unusual factors, and uncertainty remains as to when it will respond to high levels of employment. Other comments centered on the Federal Reserve’s (Fed’s) balance sheet, with the takeaway being that she expects the Fed’s reserves, currently at $4.5 trillion, to be reduced substantially. Yellen declined to say how low the balance sheet will ultimately be reduced.
Click here to download the complete weekly report: Endowment Wealth Management Weekly Review July 14, 2017