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4/29/2016
Market Update

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The European Central Bank (ECB) kept interest rates at a record low and hinted at potential further cuts, and the Bank of Japan (BOJ) projected similar intentions ahead of its announcement next week. OPEC mentioned a possible revival of oil production freeze talks at its June summit following an unsuccessful meeting last weekend as prices surged on Friday, recording their third straight week of gains.
This Week
  • The European Central Bank (ECB) kept interest rates at a record low and hinted at potential further cuts, and the Bank of Japan (BOJ) projected similar intentions ahead of its announcement next week. OPEC mentioned a possible revival of oil production freeze talks at its June summit following an unsuccessful meeting last weekend as prices surged on Friday, recording their third straight week of gains.
  • March housing starts fell by 8.8% to the lowest level since October, suggesting that the housing market is beginning to cool after a strong 2015, although some economists expect building activity to rebound on the merits of a continued healthy job market and low interest rates.
  • Despite March’s drop in housing starts, U.S. homebuilders remain confident about construction growth in 2016, according to the April National Association of Home Builders’ reading, which registered well above the cut-off between “poor” and “good” sentiment.
  • Existing home sales moved up by 5.1% in March, overcoming a dip in February that was attributed partially to financial-market volatility and severe winter weather conditions. Housing inventory remains low, especially in the Northeast and Midwest.
  • The FHFA house price index advanced by a modest 0.4% in February, its softest gain since August. The year-over-year rate has held at or near 6% over the last twelve months ― a respectable reading in a low-inflation environment.
  • Initial jobless claims fell to 247,000 last week, remaining below 300,000 for the 59th straight week, the longest below that count since 1973. The four-week moving average fell by 4,500 last week to 260,500. Continuing claims fell by 39,000 to 2,137,000 for the week ending April 9, the lowest level since 2000. All readings point to a continued robust labor market and increase the chances of a first-rate U.S. employment-growth reading for April.
  • The Philadelphia Fed manufacturing index crept back into contraction in April, after an optimistic March reading. New orders are flat while backlog orders declined and shipments tumbled after a dramatic spike last month. A contraction in inventories signals a guarded business outlook.
  • U.K. retail sales fell in March by 1.3%, much more than expected, which signals weakened consumer spending amid uncertainty about Britain’s future in the European Union, its generally gloomy economic outlook and sluggish wage growth.
  • ECB president Mario Draghi announced that interest rates will remain at current levels (and could move lower) for an extended period. He also remarked that inflation could turn negative in the near future before picking up later in 2016.
  • Ahead of next week’s BOJ meeting, BOJ head Haruhiko Kuroda noted that the yen’s recent appreciation challenges the BOJ’s efforts to increase Japan’s inflation rate to 2% and could provide cause for additional monetary easing measures. The strengthening yen hurts Japanese exporters and drags down import prices.

 

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