Friday, May 31, 2019

Daily Market Report 5/31/19 A lot of Economic data to go over this morning from the Calendar.  We'll start off with Personal Income, which rose 0.5% in April; whereas Consumer Spending rose only 0.3% in April.  Personal Consumption Expenditure (PCE) rose 0.3% in April, which it's YoY rose from 1.4% to 1.5%.  The Core PCE (also, known as Core Inflation) rose 0.2% in April, and rose from 1.5% to 1.6% YoY.  The Core PCE is the Fed's favorite gauge for inflation.  It removes variables, food and energy, from the PCE, and provides a controlled number.  Manufacturing in Chicago region improved, as the Chicago PMI rose from 52.6 to 54.2 in May.  This was important, as we saw Manufacturing in Philadelphia and NY come to border of contraction.  Consumer Sentiment Index dropped from it's initial May reading of 102.4 to 100.00; however, it's still up from it's April reading of 97.2.  Stocks are in the Red this morning, as President Trump surprised the Markets with Tariffs on imports from Mexico.  This is in an effort to gain more support from the Mexican Gov't to address the illegal border crossing.  If it persists, then the US will continue raising Tariffs by 5% each subsequent month until it's at 25%.  As for China, there are reports that they are planning to releasing another retaliatory measure against the US, especially with their treatment toward Huawei and a few other Chinese companies, whom have been placed on the Entities list (essentially have been blacklisted).  It was reported that Manufacturing dropped again in China.  Mortgage Rates improved today, as the MBS is Up 9bps this morning; so, coupled with yesterday's higher number and today's, Lenders will show some improvement.  Yields continued to drop, as it's now down to 2.17%.  This is going to concern investors, as this will deepen the Inverted Yield Curve, which is a precursor sign toward a recession.

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