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Weekly Market Update – March 17, 2017

The Dow finished down on Friday, sliding 20 points to close at 20,914.  For the week, the Dow was up 0.1% (S&P 500 +0.2%) and year-to-date is now up 5.8% (S&P 500 +6.2%).  The yield on the 10-year Treasury fell 4 bps Friday to 2.50%, ending the week down 9 bps.  Through Thursday, March 16, our trust preferred portfolios were up over 1.5% YTD, substantially more than the Barclays Aggregate Bond Index, which is flat.

US economic data was generally as expected this week.  The NFIB Small Business Optimism Index remained high in February.  Inflation is tracking around 2% y/y.  The FOMC hiked the federal funds rate as expected by 25 basis points to 0.75-1.00%.  Housing starts for February came in at an annualized pace of 1.29 million.  And the Conference Board’s Leading Economic Indicators for February were up 0.6% m/m, similar to last month.  This past week, investors continued to move funds into equities, particularly US value funds and materials stocks, at an accelerated pace.

Obamacare remains at the center of congressional and media attention.  Republicans are actively massaging the administration’s proposal and the President is reportedly making concessions to Medicaid requirements as well as some alterations to proposed tax credits.  Tax reform remains next in line for consideration and infrastructure stimulus seems to be on the backburner. 

The price of crude oil was up 1% on the week to ~$49 a barrel – down ~9% YTD.  EIA reported crude stockpiles declined this week – by <1m barrels – after nine weeks of builds, and also that product inventories of gasoline (-4.2m bls) and diesel (-5.2m bls) continue to fall hard as refinery utilization is down almost 4 percentage points y/y.  Saudi Arabia sounded a bit more positive this week as Oil Minister Al-Falih reassured oil markets that an extension of the OPEC cut was very much on the table for the OPEC meeting May 25th.  The US rig count rose 20 this week (+14 oil, +6 gas).

Next week’s economic calendar may be a bit quieter, with housing data (prices, existing-home sales, pending-home sales) on Wednesday (3/22) and Thursday (3/23), weekly jobless claims also on Thursday (3/23), and durable goods orders on Friday (3/24). 

Have a great weekend!


Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464