The Weekly Commentary and Statistics section compiles the most important economic and market signs and signals from the past seven days.
As of November 20, 2009
n After a promising start to the week, major global markets drifted down for the remainder of the period. U.S. markets were flattish, while global exchanges fared less well. China was a notable exception, with the Shanghai Composite up nearly 4%.
n Unexpectedly, some near-dated Treasury bills traded at negative rates toward the end of the week, meaning that investors basically are paying the government to protect their money. This last happened following the collapse of Lehman Brothers. However, given that other key panic indicators — such as Libor and corporate borrowing rates or the dollar — have not spiked, the brief negative rates don’t seem to imply a broad-based panic.
n Economic releases over the week continued to be uneven but are still indicative of a recovering economy. On the plus side, CPI and PPI remained stable, as did initial job claims, while retails sales exceeded forecasts. In the negative column, the trade deficit widened more than expected on a surge in oil and auto imports, consumer sentiment and housing starts fell, and industrial production rose less than expected.
n Japan’s economy has slipped back into deflation for the first time since 2006, inspiring calls for the adoption of additional easing measures by the Bank of Japan. During the third quarter, Japan’s domestic demand deflator fell at its fastest pace in over 50 years.
n Treasury Secretary Geithner said the government would unwind TARP “as soon as we can”; he added that the “substantial resources” remaining in the fund would be used to pay down the national debt. Meanwhile, the European Central Bank took a small first step toward unwinding its stimulus program, stating that it will tighten the collateral standards of its asset-backed security program.
n The House Financial Services Committee voted to grant Congress broad oversight of Federal Reserve policy decisions and operations, including monetary policy; the Fed had long been exempt from Congressional audits of its monetary policy. Fed officials strongly oppose the measure, saying it undermines the central bank’s political independence.
Source: FactSet, Bloomberg
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Index Definitions
Barclays Capital Global Aggregate Bond Index measures a wide range of global government, government-related, corporate and securitized fixed-income investments, all with maturities greater than one year.
Barclays Capital High-Yield Bond Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.
Barclays Capital U.S. Aggregate Index is a bond market index composed of US securities in Treasury, Government-Related, Corporate, and Securitized sectors that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $250 million.
Dow Jones Industrial Average is a price-weighted average computed from the stock prices of 30 of the largest and most widely held public companies in the United States, adjusted to reflect stock splits and stock dividends.
FTSE EPRA/NAREIT Global Real Estate Index represents general performance trends of the equity securities of real estate companies involved in the ownership, disposition and development of income-producing properties worldwide.
JPMorgan Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded foreign currency denominated debt instruments in the emerging markets which meet minimum criteria for face value outstanding and market trading liquidity.
MSCI EAFE Index is a free float-adjusted market capitalization weighted index designed to measure developed markets’ equity performance, excluding the US & Canada, for 21 countries.
MSCI Europe ex-U.K. Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of the 15 developed European markets except the United Kingdom.
MSCI U.K. Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of listed common stocks in the United Kingdom.
MSCI Asia ex-Japan Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of the 15 developed Asian markets except Japan.
MSCI Japan Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of listed common stocks in Japan.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that measures emerging market equity performance of 22 countries.
Municipal Bond Index is a bond index that includes investment-grade, tax-exempt fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million.
NASDAQ Composite Index is a market capitalization weighted index of the performance of domestic and international common stocks listed on The Nasdaq Stock Market including over 2,800 securities.
Russell 1000 Growth Index measures the large-cap growth segment of the U.S. equity market including Russell 1000 companies with higher price-to-book ratios and forecasted growth.
Russell 1000 Value Index measures the large-cap value segment of the U.S. equity market including Russell 1000 companies with lower price-to-book ratios and lower expected growth.
Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with higher price-to-book ratios and forecasted growth.
Russell Midcap Value Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with lower price-to-book ratios and forecasted growth.
Russell 2000 Growth Index measures the performance of small-cap growth stocks in the U.S. equity market including Russell 2000 companies with higher price-to-value ratios and forecasted growth.
Russell 2000 Value Index measures the performance of small-cap growth stocks in the U.S. equity market including Russell 2000 companies with lower price-to-value ratios and forecasted growth.
S&P 500 Index is a widely regarded as the best single gauge of the U.S. equities market, including 500 leading companies in major industries of the U.S. economy.
S&P 500 Sectors are defined as the GICS (Global Industry Classification Standard) sectors which provide standardized industry definitions consisting of 10 sectors, 24 industry groups, and 68 industries.
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