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03/15/2016
Market Update

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Signs of U.S. economic momentum persisted this week. Oil prices climbed through Friday, helped by supply easing. U.S. stocks celebrated a seven-year bull market this week, the third longest on record. The European Central Bank (ECB) introduced an aggressive monetary stimulus plan; global stocks and currencies fell following the announcement due to uncertainty around further easing by the ECB.
This Week
  • Signs of U.S. economic momentum persisted this week. Oil prices climbed through Friday, helped by supply easing. U.S. stocks celebrated a seven-year bull market this week, the third longest on record. The European Central Bank (ECB) introduced an aggressive monetary stimulus plan; global stocks and currencies fell following the announcement due to uncertainty around further easing by the ECB.
  • The U.S. Treasury budget deficit expanded slightly in February to $193 billion, remaining near a seven-and-a-half year low. Though a growing gap between government spending and revenue adds to the national debt, it also points to increased government spending and economic stimulus.
  • Home mortgage applications rose by 4% during the week ending March 4, bringing the year-over-year gain to 30%. Demand for refinancing has also been strong this week despite a 2% decline during the week, suggesting growing economic confidence.
  • Store sales’ year-over-year number was slightly higher at 0.7% for the week ending March 5. This indicates a strengthening economy, which is largely driven by consumer spending.
  • The Federal Reserve reported that the net worth of U.S. households reached a record high by the end of 2015, primarily as home equity reached the highest point in a decade.
  • U.S. initial jobless claims fell by 18,000 to 259,000 in the week ending March 5, while the four-week moving average dropped by 2,500 to 267,500 — both registering the lowest levels since October. Continuing claims dropped by 32,000 to 2,225,000 for the week ending February 27, the second lowest reading in 2016. The reduced number of claims point to an improving job market.
  • Import and export prices fell almost equally during February, by 0.3% and 0.4%, respectively, continuing a lower-price trend evident in year-over-year declines.
  • U.K. industrial production climbed in January by 0.3%, driven mainly by a 0.7% gain in manufacturing. Despite moving higher in the New Year, the pace of growth came in below expectations — which could impede broad-based expansion.
  • The ECB unveiled new measures designed to further ease monetary policy, including reducing its already-negative deposit rate and cutting the main interest rate on bank loans to an all-time low of zero percent. It also plans to provide cheap loans to banks and increase monthly bond purchases in its asset-buying program; both moves give banks money to extend new credit to households and businesses.
  • Japan’s economy slid by 0.3% in the fourth quarter, and 1.1% in the one-year period. While disappointing, the decline was less severe than initially reported due to improvements in capital expenditures and domestic demand.
  • Chinese exports dropped by 25.4% in the one-year period ending February, much more than expected, and imports fell 13.8%. At $32.6 billion, China’s trade surplus was essentially halved from the prior month.

 

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