- Markets lower following weak China data. The S&P 500 is down around one percent in early trading, after a sharp decline in Chinese exports sent Asian markets lower overnight. Yesterday’s session saw the major averages finish mixed, with real estate (+1.3%) the top performing sector on the day, despite a continued rise in Treasury yields. The decline in Chinese exports (-10% versus an expected 3.3% decline) weighed on the region, with the Hang Seng losing 1.6% and the Nikkei dropping 0.4% as investors moved back into the yen; though the Shanghai Composite managed to close marginally higher. European markets are similarly lower, led down by Germany’s DAX (-1.1%). Finally, COMEX gold is up slightly to $1259/oz., WTI crude oil is flat just above $50/barrel, and the yield on the 10-year Note has dropped back to 1.74%.
- Claims at new 43 year- lows. New claims for unemployment insurance came in at 246,000 for the week ending October 8, 2016, slightly better than the consensus expectations of 253,000. The October 8 reading was the lowest since November 1973. Claims are down 7,000 from their level 26 weeks ago. In the past, claims need to rise more than 75,000 over a six-month (26-week) period to indicate a recession. We expect increased week-to-week volatility in claims in the coming weeks due to the impact of Hurricane Matthew, but expect claims to return to pre hurricane levels by the end of the month.
- FOMC minutes still point to December rate hike. The minutes of the September 20-21, 2016 Federal Open Market Committee (FOMC) meeting were released yesterday and continued to show that there is plenty of discord at the Fed about the timing and pace of rate hikes, but that a hike at the December meeting is likely, barring a major disruption in the global economy or financial markets. The minutes can be read here.
- Poor trade data from China. The recent trade data from China was terrible, no other way to say it. China releases this data as an annual number, even though it’s updated monthly. Exports fell -10% year over year, well below the expectation of a -3.3% decline. Such poor numbers reflect as much on the global economy as on China itself, though continued export weakness will negatively impact its economy. Chinese imports were also down, falling -1.9%, against expectations of a .6% gain. This data reflects more negatively, and more directly, on the Chinese economy itself.
- Singapore: GDP (Q3)
- China: CPI (Sep)
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The economic forecasts set forth in the presentation may not develop as predicted.
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Stock investing involves risk including loss of principal.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.
Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.
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Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.
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