U.S. and International Equities
Major U.S. and International Markets Finished Higher
The major equity markets reversed course from last week to finish higher. The international markets results were mixed as developed international markets, as represented by the MSCI EAFE Index, finished slightly lower while emerging markets, as represented by the MSCI EM Index, finished higher.
Energy Higher a Fourth Straight Week; Financials Also Lead
Energy stocks continued their run higher as market participants bid these names up over lower-than-expected worldwide energy supply in the face of rising demand. The energy crunch continues to dominate the headlines given the implications for global growth and both monetary and fiscal policy. Financials also led the week as the sector continues to be a beneficiary of rising interest rates and a steepening yield curve.
Fixed Income and Commodities Recap
Bonds Lower While Commodities Ended Mixed
The Bloomberg Barclays Aggregate Bond Index finished lower for the third straight week. Bond prices declined while the 10-year Treasury yield ended the week higher, a trend that began three weeks ago. Investment-grade corporate bonds, as tracked by the Bloomberg Barclays Credit index, pulled back the most in a tough week for bonds.
Oil finished higher for the third straight week amid worldwide supply concerns. Moreover, copper and silver caught bids this week as investors took advantage of oversold conditions despite signs of economic improvement.
Economic Weekly Roundup
Sluggish September Jobs Report Amid Improving Initial Claims
The U.S. Bureau of Labor Statistics released its September employment report today, revealing that the domestic economy added less than 200,000 jobs during the month. This was well short of Bloomberg-surveyed economists’ median forecast for a gain of 500,000. Somewhat contradictory, the unemployment rate fell more than forecast to 4.8% in September, beating expectations, though that was paired with a reduced labor force participation rate of 61.6% when expectations were higher.
Initial claims for unemployment insurance were reported at over 320,000 which came in well below last week’s revised number of over 360,000 in addition to consensus estimates. Continuing claims still remain elevated by about 100,000 above pre-pandemic readings, however we expect the gradual improvement to continue, bolstered by evidence that the latest wave of Delta variant cases have peaked.
Other highlights from this week’s economic calendar included:
The Institute for Supply Management’s (ISM) Services Index for September inched higher, coming in marginally above the consensus estimate.
Payroll processor ADP reported this week that U.S. companies added over 550,000 jobs last month which handily surpassed the Bloomberg consensus forecast of 430,000. Last month’s new job count also beat out August’s final count by almost 200,000 jobs.
The following economic data is slated to be released during the week ahead:
Tuesday: September National Federation of Independent Business (NFIB) Small Business Index; US Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS)
Wednesday: September Consumer Price Index (CPI), September hourly earnings and average workweek statistics, Federal Open Market Committee (FOMC) September minutes
Thursday: Weekly initial and continuing unemployment claims, September Producer Price Index (PPI)
Friday: September export/import price index, September business inventories, September retail sales, October University of Michigan sentiment
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