Economic Data Overshadowed by Events in Washington

December 4, 2017

Economic Data Overshadowed by Events in Washington Photo

The events in Washington overshadowed the release of solid economic data last week. With consistent economic data emerging over the last few weeks, markets have shifted their primary attention to the events in Washington.

The three key areas of focus are tax reform, the Russia investigation and a potential North Korean response. With Friday evening’s passing of the tax bill in the Senate, it appears significantly more likely a bill will make it to the President’s desk prior to the end of the year. I expect continued support for equities coming from the tax bill and deregulation efforts like the initial legal victory of the appointment of Mick Mulvaney as the interim head of the Consumer Financial Protection Bureau. However, the Russia investigation and instability in North Korea have the potential to add downward pressure and volatility to markets over the next several weeks.

The November employment report on Friday will be the most significant economic data released this week. Expectations are for 199,000 new jobs for the month, keeping the unemployment rate at 4.1%. It is also expected that average hourly earnings will increase by 0.3% for the month to 2.7% for the past year. Keep an eye on break even inflation to see if the markets begin to price in rising inflation expectations as a result of the strong employment environment.

 

Tags: Monday Morning O'Malley | Employment numbers | Equity market | Tax reform | Jobs report | North Korea | Russia investigation

< Go to Monday Morning Perspectives

This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications