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Bits and Pieces

Very little market-moving economic data was released this week. Instead, the financial markets were driven by other issues – arrests in Saudi Arabia, Treasury auctions and progress (or lack thereof) on the tax reform program. By the end of the week, stocks plummeted as news unfolded of a major change in the reform – corporate tax cuts may be delayed until 2019. The turnabout in stocks exemplified just how much weight the market is putting on Washington being able to accomplish what it set out to do.

Other Key Indicators this Week:

Oil –The price of oil is up 13 percent from a year ago amid a shake-up in Saudi Arabia. After a decline of 24 percent mid-year, the price of oil has increased steadily. Global economies are strengthening at the same time, industrial activity is picking up and the demand for oil is growing. The arrest of key members of the cabinet ministries in Saudi Arabia over the weekend pushed prices up to the highest level in two years. Investors surmise the musical chairs may prompt Saudi Arabia to follow through on promises to cut output. At the same time, OPEC forecasts shale oil production will increase faster than expected over the next four years, due to price recovery and growing demand. North America stands to benefit the most, with production forecast to rise over 50 percent.

JOLTS – The number of job openings rose by 3,000 in September and remains just below the record high reached in July. The demand for workers remains strong across industries. The professional and business services sector has the largest number of openings, followed by healthcare services and transportation. The quits rate, which reflects confidence in the job market, rose slightly to 2.2 percent. Employers are citing a lack of qualified workers as the labor market reaches full employment.

Consumer Credit – A jump in auto sales contributed to a 6.6 percent spike in consumer credit in September. This was the largest monthly gain in 10 months. Non-revolving credit, which includes auto loans, rose by $14.4 billion as consumers moved quickly to replace vehicles damaged from the hurricanes. Outstanding debt grew at a 5.5 percent pace in the third quarter, the fastest this year.

Fed Update – More changes are in store for the Federal Reserve. New York Fed President William Dudley announced his intention to retire next year. This move was already in the works and is unrelated to the new Chair appointment. Last month, Fed Vice Chairman Stanley Fischer stepped down. Three additional seats on the board are open, providing Trump a chance to reorganize the committee to his liking.

Strategically for Credit Unions:

Deposit rates are starting to increase at a faster pace, especially at the larger financial institutions. Small and medium-sized banks and credit unions have managed to hold off raising rates, but the breaking point may be near. As loan demand continues to increase, higher rates may be necessary to bring in deposits. The next rate increase by the Fed may finally catch the public’s attention enough to bring out the rate hunters.

Sarina Freedland – Senior Investment Officer

Although this information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results. Changes in any assumption may have a material effect on projected results.