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Week In Review


Producer prices rose 2.6% from a year earlier, and consumer prices rose 2.3%.  Apparel prices rebounded from August, while used car prices slipped.

Our Take

Recent wage gains are not yet filtering through to higher consumer prices.  These inflation readings are unlikely to alter the Fed’s gradual tightening trajectory in either direction.


Juncker called on Italy to stick to EU fiscal targets, and Salvini and DeMaio immediately rejected this warning.  The spread between 10-year Italian government bonds and bunds widened to a five-year high due to concerns about the Italian fiscal trajectory and a confrontation with the EU.  Tria commented that widening spread levels may begin to impact Italian bank capitalization levels.

Our Take

The EU and ECB are allowing capital markets to respond to Italy’s changed fiscal trajectory.  A crisis in the Italian banks will be the most immediate way that rising yields on Italian government debt will be felt in the Italian economy.  Without an indication of some support from the EU and ECB, Italy’s fiscal picture is likely to worsen from here due to higher interest payments and the cost of potential bank recapitalizations.


North Dakota is now the only state that carries a negative outlook at Moody’s Investors Service.  Moody’s changed its outlook on Mississippi from negative to stable, leaving North Dakota as the only state with a negative outlook.  S&P does not currently assign a negative outlook to any state.

Our Take

North Dakota had struggled with declining oil prices and falling employment when Moody’s assigned the negative outlook in 2016.  Having only one state with a negative outlook at Moody’s and no states with a negative outlook at S&P is good news for investors.  States have taken steps to improve their fiscal health.

All expressions of opinions are subject to change without notice in reaction to shifting market conditions.  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.  Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.