Statistic of the Week:
Every year in May, Congress sets the rate for student loans in the coming year based on the 10-year Treasury. Undergraduate loans will see an 18.4% increase in rates, while graduate loan rates will rise 13%. After mortgage debt, student loans are the largest category of consumer debt in the US at $1.4 trillion.
An appeal by Russia to end the freeze on loans by the European Bank for Reconstruction and Development was denied. The initial ban was put in place in 2014 resulting from Russian involvement in Ukraine. The EBRD was created to help former Soviet Bloc countries rebuild and transition to democratic and capitalist systems.
Market Moving Events:
Monday: Housing Market Index Tuesday: Housing Starts, Industrial Production Wednesday: Petroleum Status Report Thursday: Jobless Claims, Philly Fed Outlook, Leading Indicators
The S&P 500 and the DJIA snapped weekly winning streaks, falling 0.5% and 0.3%, respectively last week.1 The NASDAQ, however, continues to flirt with record highs, and finished the week up 0.3%.2 The CBOE Volatility Index has continued its march lower – hitting 9.77.3 (A reading of about 15 is considered “normal.”) This “fear gauge” is at its lowest level since 1993.4 Treasury yields remain largely unchanged, with the rate on the 10-year closing Friday at 2.33%.5 Stability in the fixed income markets, especially at these low levels, are supportive of debt-related transactions at consumer and business levels. Investors last week were initially enthused with the outcome of the French election, but took on a more cautious tone as actions by the Trump administration were called into question. While volatility is low, an unexpected spike is not out of the question. It is important to remember that much of the risk we view in the markets today is political – both on the domestic and international stages. Tax policy, infrastructure spending, international trade agreements, global security, and consumer confidence are all greatly influenced by political action (or inaction). Retail is likely to be the main focus of the week. While broad retail sales (chart right) is showing a positive trend, there is much discussion about the future of “brick and mortar” while online vendors pick up traction. Several major retailers will be reporting – investors will be taking notes. - Dan McElwee, CFP®
Chart of the Week: