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Market Summary

Equity markets continued to push higher in a quiet week from a headline perspective, outside of some solid U.S. employment data and signs of improving manufacturing activity in the U.S. and China. For the week, the tech-laden NASDAQ index gained 2.7%, followed by the S&P 500 and Dow Jones with returns of 2.1% and 1.5%, respectively. The U.S. Treasury yield curve also rose and steepened as economic growth expectations stabilized a bit, with the 10-year U.S. Treasury yield closing the week at 2.50%, above the short end of the curve, compared to 2.41% the week prior.

On Friday, the U.S. Labor Department released an employment report for March that was well received by equity investors as it confirmed that February’s soft jobs report was the fluke it seemed to be. The U.S. economy added 196,000 jobs in March, above the average consensus for 175,000 jobs and up from February’s reading of only 33,000 job additions, and the unemployment rate was unchanged at 3.8%. Hourly earnings rose at a slightly lower than expected rate of 3.2% year-over-year, indicating that inflationary pressures remain in check.

Optimism on last week’s trade talks in Washington between the U.S. and China also supported equity prices after President Trump announced that swift progress had been made and that both nations are aiming to reach a deal in the next four weeks.

Meanwhile in Europe, negotiations between Britain and the E.U. seem further from a conclusion as Prime Minister Teresa May is seeking an extension on Brexit talks through at least June 30, and E.U. diplomats are considering a compromise plan that would give the U.K. a full extra year.

First quarter earnings announcement season will kick off later this week with some major financial institutions being the first on the docket. Investors will also be paying attention to updated inflation data and the release of the FOMC’s March meeting minutes on Wednesday.

Economic Highlights:

Manufacturing: The U.S. ISM manufacturing index rebounded to 55.3 in March from a two-year low of 54.2 in February. Meanwhile, China’s Manufacturing PMI unexpectedly crossed into expansion territory (above 50) with a reading of 50.5 in March from 49.2 in February. A pick up in the manufacturing activity in China would be supportive for global growth.

Oil: Oil prices continue to move higher, with Brent and WTI crude hitting 2019 highs overnight ($70.62/bbl and 63.45/bbl, respectively) amid falling supply from an increase in violence in Libya, OPEC's ongoing supply cuts, and U.S. sanctions against Iran and Venezuela.

US Economy – The Week Ahead

Tuesday, 4/9/2019

  • NFIB Small Business Optimism Index – Consensus: 101.3 (-0.4% MoM), Prior Month: 101.7 (0.5% MoM)
  • Job Openings & Labor Turnover Survey – Consensus: 7,573K (-0.1% MoM), Prior Month: 7,581K (1.4% MoM)

Wednesday, 4/10/2019

  • U.S. Consumer Price Index (CPI) Year-Over-Year – Consensus Estimate: 1.8%, Prior Month: 1.5%
  • Federal Open Market Committee (FOMC) March meeting minutes released

Thursday, 4/11/2019

  • Initial Jobless Claims – Consensus Estimate: 211,000 (4.4% WoW), Prior Week: 202,000 (-4.7% WoW)
  • U.S. Producer Price Index (PPI) Year-Over-Year – Consensus Estimate: 1.9%, Prior Month: 1.9%

Friday, 4/12/2019

  • University of Michigan Consumer Sentiment Survey (Preliminary) – Consensus Estimate: 98.0 (-0.4% MoM), Prior Month: 98.4 (4.9% MoM)
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