Weekly Market Update

WILL A SURGE IN CONSUMER SPENDING BE THE CATALYST FOR INCREASED BORROWING COSTS?

Thursday, June 1, 2017

Consumer spending rose 0.4% in April, within consensus expectations, after experiencing a revised increase of 0.3% in March. Increased consumer spending, which makes up more than two-thirds of the U.S. economy, hit a four-month peak in April, indicating elevated demand in the second quarter. The first quarter of 2017 saw the slowest growth of consumer spending since 2010, which contributed to fears of slowing economic growth. Proceeding the release of the FOMC Board May meeting minutes, these fears became apparent as the Board indicated a delay in another interest rate hike, to ensure that sluggish economic growth was only temporary. April's strong consumer spending may alleviate worries of less than optimal overall economic growth in the second quarter. Some believe that this gain will aid policymakers in deciding to raise interest rates at the June FOMC Board Meeting.

In Other News

  • With $500 billion in assets to invest, university endowments are finding a dearth of sustainable deals. Two years ago, the University of California System, a well-known "green" investor and one of the largest public university systems in the country, dedicated more than one billion dollars in projects endorsed by the Obama White House in connection with clean energy and water.
  • On Wednesday, adjunct professors at Northwestern University voted to form a union. The vote, was the result of an earlier petition that detailed how non-tenured faculty were being allocated excessive teaching responsibilities compared to their tenured counterparts. The union will be represented by the Service Employees International Union Local 73 and may include more than 675 adjunct professors.
  • Beginning in 2017, low-income high school graduates residing in the City of Boston will be eligible for free tuition. In a program called Boston Bridge, the program will provide scholarships for tuition and fees over Federal Pell Grants. The program will include three community colleges where students will complete their Associate's degree and can then transfer to a state college or university to finish their Bachelor's degree.
  • San Francisco has awarded $2.7 million to 13 nonprofits in 2017 to help each entity buy or purchase space for operations. Ed Lee, Mayor of San Francisco, has recognized the great importance of the work performed by the nonprofits in his city and intends to build $6 million over two years into the city's budget to cover these grants for nonprofits.
  • Southern New Hampshire University is embarking on a restructuring of its online College for America. It plans to replace almost 90 mostly part-time remote "coaches" with full-time in-house employees, growing the program staff over time. College for America is a competency-based workforce development program that relies heavily on mentoring as a way to educate students who have often been less successful with traditional learning approaches.

Rating Agency Update

  • Moody's downgraded S. Georgia College Bonds to A2. The outlook is stable.
  • Moody's affirmed University System of Georgia Aa3 and A1. The outlook is stable.
  • Moody's assigned Aa1 to State University of Iowa's Recreational Facilities Bonds. The outlook is stable.
  • Moody's assigned Aa2 to Iowa State University's Recreational System Refunding Series 2017. The outlook is stable.
  • S&P assigned AA- to Tufts University Series 2017A Taxable bonds. The outlook is stable.
  • S&P affirmed AA to Pepperdine University's outstanding bonds. The outlook is stable.
  • S&P affirmed AA- to University of Wyoming Trustees' outstanding bonds. The outlook is stable.
  • S&P affirmed A- to Illinois Wesleyan University's Series 2016 Revenue Refunding bonds. The outlook was revised to stable from negative.
  • S&P affirmed AAA to the Texas A&M University System Board of Regents' Permanent University Fund (PUF) bonds. The outlook is stable.
  • S&P affirmed AA+ to Dartmouth College's outstanding bonds. The outlook is stable.