Consumer Spending Picks Up, U.S Consumers Are Upbeat, Treasury Yields Continue Falling
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Consumer Spending Picks Up: The U.S. Bureau of Economic Analysis reported last week that personal consumption expenditures (PCE), a measure of consumer spending for all goods and services, rose 0.3% in April from March; this came on the heels of a healthy 1.1% gain in March. In particular, consumers have spent more in recent months on services like health care, recreation and financial services. A closely-watched element of the report, the PCE Price Index, which reflects the changes in prices of goods and services purchased, rose 0.3% from the previous month, its highest monthly increase in 15 months; however, on an annual basis, the price index rose at a 1.5% pace, still below the Federal Reserve’s 2.0% inflation target.

U.S. Consumers Are Upbeat: Keyed by the strong labor market and solid economy, U.S. consumers continue to feel more optimistic about economic conditions, according to two separate measures released last week. On Friday, it was reported that the University of Michigan’s Consumer Sentiment Index hit an eight-month high of 100.0 in May, up from 97.2 in April. This followed a report earlier in the week from the Conference Board, which stated that its index of consumer confidence rose to 134.1 in May, up from 129.2 in April and a six-month high. The upbeat readings could bode well for continued growth in consumer spending in upcoming months.

Treasury Yields Continue Falling: U.S. Treasury bond yields fell further last week, with the 10-year Treasury note’s yield ending the week at a 20-month low of 2.13%, down from 2.32% one week prior and 2.50% at the start of May. Last week’s move pulled the 10-year note’s yield below that of the 3-month Treasury bill, a so-called yield curve inversion, for the second time this year. (At week’s end, however, another closely-watched yield spread, between the 10-year Treasury note and the 2-year Treasury note, remained positive.) While yield curve inversions in years past have often (though not always) presaged an economic recession, many observers believe the latest inversion largely reflects the market’s belief that the Federal Reserve will move to lower the short-term federal-funds rate in upcoming months.

As of May 28, 2019

Week

Quarter-To-Date

Year-To-Date

One-Year

MSCI All Country World

-1.89%

-2.76%

9.08%

-1.29%

S&P 500

-2.58%

-2.56%

10.74%

3.78%

Russell 2000

-3.18%

-4.64%

9.26%

-9.04%

MSCI EAFE

-1.87%

-2.13%

7.64%

-5.75%

MSCI Emerging Markets

1.24%

-5.30%

4.09%

-8.70%

FTSE NAREIT

-1.20%

0.41%

17.66%

16.15%

Bloomberg Commodity

-1.23%

-3.77%

2.31%

-12.37%

Barclays Aggregate

0.92%

1.80%

4.80%

6.40%

WSJ 5/31/2019, 5/28/2019, 5/21/2019, 5/30/2019, MarketWatch 5/31/2019, US DOL 5/31/2019, CNBC 5/31/2019. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.