Stocks ended the week with substantial gains, with the Nasdaq index having the largest gains. Economic data was mixed, but continued optimism over a trade deal with China and stimulus in China, Europe and Japan helped drive the markets. Also, the gains on Friday were influenced by quarterly options and futures expiration and the rebalancing of indexes such as the S&P 500.
The U.K. failed to approved a Brexit deal but Parliament also voted down a no deal Brexit. This leaves the possibility of an extension or a second referendum.
The Bank of Japan left short term interest rates unchanged at -0.1% and will continue asset purchases citing that exports and production have shown some weakness and the trend is increasing.
The dollar declined against a basket of currencies while gold and crude oil rose. The 10-year treasury yield dropped to 2.589%.
In the numbers this week:
- Germany reported
- Industrial production in January fell 0.8%. However, revised data for December showed a 0.8% rise.
- Imports rose 1.5% in December while exports were unchanged. Still Germany had a trade surplus of $20.8BN in December.
- The Bank of Japan reported that exports fell 5.3% in January with exports to China falling 7.7%
- U.S. monthly data is coming faster, as government agencies are catching up from the shutdown.
- The Federal Reserve reported that industrial production rose 0.1% in February. The gain was mostly due to a 3.7% increase in utility production. This follows a 0.4% drop in January. Factory production fell 0.4% in January after falling 0.5% in January.
- The Commerce Department reported:
- Retail sales rose a seasonally adjusted 0.2% in January despite a 2% drop in gas stations. Excluding vehicle-related spending, retail sales rose 1.2% from December. However, December retail sales were revised lower to a 1.6% drop.
- Durable goods order rose a seasonally adjusted 0.4% in January. The gain was largely driven by a 15.9% increase in civilian-airplane orders. Excluding civilian-airplanes durable goods orders fell 0.1% but excluding defense orders the durable goods orders rose 0.7%.
- New-home sales fell 6.9% in January from December and were down 4.1% from last January. This follows an upward revision to December sales, just released last week, from a 2.4% drop to a 5% gain..
- The Labor Department reported:
- First time claims for unemployment rose 6,000 to a seasonally adjusted 229,000. The four week moving average of claims fell 2,500 to a seasonally adjusted 223,750.
- Consumer prices rose 0.2% in February, following three months of unchanged prices. Excluding volatile food and energy prices rose 0.1%. For the past 12 months consumer prices have risen 1.5% with core prices rising 2.1%.
- Adjusted for inflation, wages rose 0.3% in February and 1.9% over the past 12 months.
- The producer-price index rose 0.1% in February. Excluding volatile categories like food, energy and trade services, producer prices also rose 0.1%.
- Import prices rose 0.6% in February but were down 1.3% from a year ago. Most of the increase was due to fuel prices that rose 4.9% in February but were down 6.5% from a year ago. Excluding fuel, import prices were unchanged in February.
- The Energy Information Administration weekly report is attached. Also, the EIA reported:
- U.S. Crude oil production fell from 12.1MM barrels per day to 12.0MM barrels per day.
- Storage of natural gas fell 204BN cubic feet. Natural gas storage is near the past five year minimum for this time of year.
- Baker Hughes reported in the past week that the number of active oil rigs fell 1 to 833 and the number of active gas rigs was unchanged at 193.
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