Investment Commentary –September 20th, 2017

Market Indices as of Market Close September 20th, 2017
Dow 22,412 (13.41% YTD)
S&P 2,508 (12.03% YTD)
NASDAQ 6,456 (19.93% YTD)
Global Dow 2,905 (14.34%)
Gold $1,304 (11.91%)
OIL $50.29 (-11.82%)
US 10Y Treasury 2.271 (-17.41%)
Barclay Bond Aggregate (3.28% YTD)

Fed keeps U.S. rates steady, to start portfolio drawdown in October

WASHINGTON (Reuters) – The U.S. Federal Reserve left interest rates unchanged on Wednesday but signaled it still expects one more increase by the end of the year despite a recent bout of low inflation.

The Fed, as expected, also said it would begin in October to reduce it’s approximately $4.2 trillion in holdings of U.S. Treasury bonds and mortgage-backed securities acquired in the years after the 2008 financial crisis.

New economic projections released after the Fed’s two-day policy meeting showed 11 of 16 officials see the “appropriate” level for the federal funds rate, the central bank’s benchmark interest rate, to be in a range between 1.25 percent and 1.50 percent by the end of 2017, or 0.25 percentage points above the current level.

U.S. bond yields rose, pushing up the U.S. dollar after the Fed’s decision, but U.S. benchmark stock indexes were little changed.

Holiday sales forecasts indicate strong growth for retailers

(Reuters) – Early holiday sales forecasts are indicating a largely stronger season for retailers than last year, helped by higher online sales and increasing spending power due to a strong labor market.

Deloitte said it expects holiday sales to grow 4 percent to 4.5 percent over last year’s shopping season.

Less than 11 percent of the $1.04 trillion to $1.05 trillion in total sales is expected to come from ecommerce, the consultancy estimated.

Ecommerce sales comprised about 19 percent of total retail sales last year, according to the National Retail Federation (NRF).

The NRF, a group that includes large and small retail business owners, said in January that holiday sales had grown 4 percent last year to $658.3 billion. The industry group is yet to put out its holiday sales forecast for this year.

Analytics firm RetailNext forecast 3.8 percent growth in holiday sales, while consulting firm AlixPartners on Wednesday forecast sales to grow 3.5 percent to 4.4 percent.

News around the web

Oil back to $50?

Crude oil prices surged around 5% for the week, approaching the $50 per barrel level for the first time in a month and a half. Prices were supported by shrinking global inventory attributed in part to Hurricane Harvey’s damaging impact on refining capacity in Texas.

Yields rise

The latest inflation data sent bond yields higher, as the yield of the 10-year U.S. Treasury bond rose to around 2.20%, up from 2.06% at the end of the previous week. Still, yields remain far below their level of six months ago, when the 10-year’s yield was around 2.60%.

Harvey’s impact

U.S. industrial output dropped 0.9% in August compared with the prior month, which proved to be the biggest monthly decline in eight years. The U.S. Federal Reserve attributed most of the drop to the damaging effects of Hurricane Harvey on the oil refining, plastics, and chemical industries in Texas.


Leaders this past week included Industrial goods, Financials and Basic Materials. Laggards included Healthcare, Consumer Goods and Utilities.

This day in financial history: AT&T Breaks Up

On this day in 1995 AT&T announced that it would voluntarily break itself up into three different companies. The company’s divide and conquer attitude was the brunt of many jokes in the business world. But when company announced an 11 percent gain in their stock AT&T was the one laughing.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.