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Market Brief – Friday 5/15/20

Stocks and Treasury yields headed lower in overnight trading after the trade with China appears to be heating back up. Crude oil was unphased as crude prices continue to rise, indicating the supply and demand issue from last month is over. Even if it is, crude oil at current prices will not save the U.S. oil industry from more pain.

Retail sales fell -16.4% in April and -21.6% from this time last year. Excluding autos, core retail sales fell -17.2% in April, excluding gas and autos, retail sales fell -16.2% in April and the retail control group, which feeds into GDP, fell -15.3% in April.

Industrial production fell -11.2% in April and -15.0% from this time last year. Manufacturing production dropped -13.7% in April and capacity utilization fell to 64.9% in April. Business inventories fell -0.2% in March and retail inventories, excluding autos, fell -1.0% in March.

The Job Openings and Labor Turnover Survey (JOLTS) slowed to 6.191 million job openings in March. The JOLTS survey is expected to look much different in April.

University of Michigan’s preliminary consumer confidence survey showed consumer sentiment rose to 73.7 in May as consumers began receiving their stimulus checks. Current conditions rose to 83.0 and consumer expectations fell to 67.7. Consumers also believe inflation is coming with as inflation expectations rose to 3.0% and 5-year inflation expectations rose to 2.60%.

The New York Fed announced it will taper its Quantitative Easing program next week to $6 billion per day of U.S. Treasury securities and $4.5 billion of Mortgage-Backed Securities beginning next week, bringing the weekly total to $52.5 billion.

Stocks closed the day slightly higher as investors head into the weekend optimistically. Treasury yields also closed higher on the day, with 30-year Treasury yields tagged the underside of its 50-day moving average, which acts as confirmation that the trend for Treasury yields is lower. Crude oil closed higher ahead of the June expiry on Tuesday.