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Market Trends

Weekly Economic Review | May 13, 2024

May 13, 2024

Economic Review

The Labor Department reported that initial jobless claims surged last week to its highest level since August 25th. Claims had been locked in a very tight range for the last few weeks and were bound to break at some point. More than half of the advance was due to a jump in claims in New York. First time claims in regular state programs recorded 231,000 for the week ending May 4th after the prior week’s report of 209,000. The four-week moving average climbed to 215,000 from 210,250 the prior week. Continuing claims, which include people who have received unemployment benefits for a week or more, gained 17,000 to 1,785,000 for the week ending April 27th. The insured unemployment rate, the number of people currently receiving unemployment insurance as a percentage of the labor force, remained at 1.2%.

The Federal Reserve reported consumer credit reached a record $5.059 trillion in March. Credit outstanding rose $6.3 billion after climbing an upwardly adjusted $15.0 billion in February. Credit card debt increased a paltry $152 million to $1.338 trillion after climbing $10.7 billion the previous month, the smallest increase in three years. Auto and student loan debt increased $6.1 billion in March after gaining $4.3 billion in February. Total non-revolving credit climbed to $3.721 trillion. These figures are not adjusted for inflation.

The Commerce Department reported wholesale inventories fell 0.4% in March to $894.7 billion. Year-on-year wholesale inventories have declined 2.3%. Wholesale trade sales dropped 1.3% in March after surging 2.0 in February, with year-on-year sales up 1.4%. The ratio of inventory to sales climbed to 1.35 from 1.34 in February.

The University of Michigan’s preliminary index of consumer sentiment plunged in May to the lowest level in six months. Inflation expectations rebounded to the highest levels since November, the labor market is showing signs of cooling and interest rates look to be staying higher for longer. Consumers’ living standards are deteriorating suggesting they may be running out of savings. The gauge of consumer confidence decreased to 67.4 in May from 77.2 in April. The index of current conditions dropped to 68.8 from 79.0 the prior month while the index of expectations declined to 66.5 from 76.0 the prior month. The reading for 5-10 year inflation expectations, an inflation indicator closely watched by the Fed, climbed to 3.1% in May from 3.0% in April. One-year inflation expectations increased to 3.5% from 3.2% the prior month.

The Treasury Department reported a budget surplus of $209.5 billion for the month of April with the government collecting $776.2 billion and spending $566.7 billion. This compares to a surplus of $176.1 billion a year earlier. The year-to-date deficit is $855.1 billion, which compares to a year-to-date deficit of $924.9 billion last year. April is the seventh month in the government’s fiscal year.

The Mortgage Bankers Association reported the MBA index of mortgage applications increased last week after mortgage rates pulled back from a five month high. The index rose 2.6% for the week ending May 3rd after falling 2.3% the prior week. Refinancing applications rose 4.5% to 477.5 from 456.9 the prior week. Home purchase mortgage applications increased 1.8% to 144.2. Refinancing made up 30.6% of applications with an average loan size of $255,100, while purchases average loan size was $443,200. The average contract rate on a 30-year fixed-rate mortgage dropped to 7.18% from 7.29% the prior week.

BOND MARKET REVIEW

Rates were mixed last week with very little economic data to provide direction. Friday’s yields for the 2-, 5-, 10- & 30-year Treasury benchmarks securities closed at 4.87%, 4.51%, 4.50% and 4.64%. The 2yr/5yr, 5yr/10yr, 10yr/30yr and 2yr/30yr spreads closed at -36, -1, 14, and -23 basis points respectively.

Economic/Events Calendar

Tuesday

May 14

Apr NFIB Small Business Optimism (88.2)

5:00 Central

Apr Producer Price Index (0.3%)

7:30 Central

Apr Producer Price Index-YOY (2.2%)

7:30 Central

Apr PPI Ex Food & Energy (0.2%)

7:30 Central

Apr PPI Ex Food & Energy-YOY (2.3%)

7:30 Central

Wednesday

May 15

May 10th MBA Mortgage Applications

6:00 Central

May Empire Manufacturing (-10.0)

7:30 Central

Apr Consumer Price Index (0.4%)

7:30 Central

Apr Consumer Price Index-YOY (3.4%)

7:30 Central

Apr CPI Ex Food & Energy (0.3%)

7:30 Central

Apr CPI Ex Food & Energy-YOY (3.6%)

7:30 Central

Apr Retail Sales (0.4%)

7:30 Central

Apr Retail Sales Ex Auto & Gas (0.1%)

7:30 Central

Mar Business Inventories (-0.1%)

9:00 Central

May NAHB Housing Market Index (51)

9:00 Central

Thursday

May 16

May 11th Initial Jobless Claims (220k)

7:30 Central

Apr Housing Starts (1,420k)

7:30 Central

Apr Building Permits (1,480k)

7:30 Central

Apr Import Price Index (0.3%)

7:30 Central

Apr Import Price Index ex Petroleum (0.1%)

7:30 Central

Apr Industrial Production (0.1%)

8:15 Central

Apr Capacity Utilization (78.4%)

8:15 Central

Friday

May 17

Apr Leading Index (-0.3%)

9:00 Central

About the Expert

Troy Clark

Senior Vice President, Fixed Income Strategist, Fixed Income Sales & Trading

Mr. Clark has been in investment banking since 1983. He is a Chartered Financial Analyst. He has been a fixed income strategist at Stephens Inc. since 1996, developing investment strategies, policies and procedures for institutions consistent with overall asset/liability management.

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Source: Bloomberg L.P.
  1. This report has been prepared solely for informative purposes as of its stated date and is not a solicitation, or an offer, to buy or sell any security. All expressions of opinion reflect the judgment of the individual expressing the opinion and are subject to change. This report does not purport to be a complete description of the markets or developments referred to in the material. Information included in the report was obtained from internal and external sources which we consider reliable, but we have not independently verified such information and do not guarantee that it is accurate or complete. Prices, yields, and availability are subject to change with the market. There is no assurance any forward looking statements will be realized or any of the trends mentioned will continue. Nothing in this report is intended, or should be construed, as legal, accounting, regulatory or tax advice. Additional information available upon request. 2024 Stephens Inc., Member NYSE/SIPC.