3 Stories in the global economy that should not go un-noticed
Markets experienced one of the best weeks in months, with the S&P 500 setting a new high after lawmakers finally struck a deal in Washington. An agreement was finally reached last Wednesday to reopen the government, raise the debt ceiling, and avert a default on U.S. debt. The deal came on the 16th day of the shutdown and just one day before the U.S. Treasury would have hit the debt ceiling and exhausted its ability to borrow money.
For the week, the S&P 500 gained 2.42%, the Dow gained 1.07%, and the NASDAQ gained 3.23%.
Here are the 3 stories this week that rose above the noise:
Live From New York! It’s Jobs Tuesday!
The Wall Street Journal blog did a nice job of dissecting today’s jobs report. Overall, the economy added 148,000 jobs in September, well below the consensus 180,000 expectation and below the 185,000 monthly average for the prior 12 months.
However, the effects of the government shutdown will not be apparent until next month’s report and as such it is likely that today’s report will not materially influence the Fed’s decision at its October 29-30 meeting. Gold prices spiked to a three-week high as taper expectations are likely pushed out further. Similarly, the U.S. dollar continued its slide against major currencies.
Holiday present: $3.15 a Gallon Gas by Christmas
Although recent domestic economic data has been mixed at best and may be further slowed by the recent partial government shutdown, one positive that may provide a boost is falling gasoline prices. As detailed in this USA Today article, gasoline prices may continue sliding into the holiday season based on recent supply data and normal historical tendencies.
Gasoline prices are now 13 percent lower than a year ago, which is a magnitude of decline that has not happened often over the past 10 years and should provide some boost to consumer spending in the coming months.
Sales of Existing U.S. Homes Fall as Affordability Drops
Rising mortgage rates are beginning to impact the U.S. housing market. Sales of existing homes eased in September, declining by 1.9 percent to a seasonally adjusted annualized rate of 5.29 million. Additionally, existing home sales in August were revised downward, but still remained at a four-year high.
The average sales price increased by 11.7 percent over the previous year, mainly from continued tight supplies in the housing inventory. If mortgage rates and housing prices continue to climb, housing affordability could slow the housing recovery. However, the current national average for a 30-year mortgage is 4.28 percent, which is still low by historical standards.
Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team.
