Weekly Economic Update

WEEKLY ECONOMIC UPDATE September 25, 2017 FEDERAL RESERVE: UNWINDING WILL BE GRADUAL Last Wednesday, the country’s central bank detailed how it would shrink its mammoth balance sheet. During the fourth quarter, the Fed will unload $10 billion of maturing bonds per month; in each subsequent quarter, the monthly runoff will increase by $10 billion until reaching a limit of $50 billion. Fed chair Janet Yellen said that this schedule is set in stone, barring a “sufficiently great” economic threat. The Fed made no interest rate move last week, but 12 of 16 Fed officials do project a hike before 2017 ends.

HOME SALES RETREAT AGAIN In August, existing home sales fell for the fourth time in five months. Resales decreased 1.7% to a seasonally adjusted annual pace of 5.35 million, a 12-month low, according to the National Association of Realtors. Two factors hindered would-be buyers: a median house price of $253,500 and a 2.1% monthly reduction in inventory (the supply of homes for sale was 6.5% greater in August 2016).

THIS WEEK… August new home sales numbers, the latest S&P/Case-Shiller home price index, the September Conference Board consumer confidence index, and earnings from Cintas, Darden Restaurants, Micron Technology, and Nike all are reported on Tuesday. On Wednesday, earnings are announced for Jabil Circuit, Pier 1 Imports, Thor Industries, and Worthington Industries. Also, reports on August durable goods orders and pending home sales are revealed. Thursday, the federal government’s second estimate of Q2 GDP and a new initial jobless claims report are made public. The August personal spending report, the Federal Reserve’s August PCE price index, and the final September University of Michigan consumer sentiment index surface Friday.

W. Kelly Montgomery, AIF®, APMA®, Vice President / Senior Portfolio Manager

BENCHMARKS

VALUE AS VALUE AS ONE WEEK YEAR-TO-DATE 1-YEAR OF OF TOTAL RETURN TOTAL RETURN TOTAL RETURN 12/31/16 9/23/17

S&P 500 INDEX DOW JONES INDUSTRIAL AVERAGE NASDAQ COMPOSITE INDEX MSCI EAFE INDEX BARCLAYS AGGREGATE BOND INDEX FED FUNDS TARGET 6-MONTH US TREASURY YIELD 2-YR US TREASURY YIELD 10-YR TREASURY YIELD CRUDE OIL ($/BARREL)

2,502.22 22,349.59 6,426.92 1,977.61 103.66 1.25% 1.19% 1.46% 2.26% $50.66

2,238.83 19,762.60 5,383.12 1,684.00 102.70 0.75% 0.62% 1.20% 2.45% $53.72

GOLD ($/OZ.)

$1,297.50

$1,151.70

0.09% 0.36% -0.33% 0.70% -0.15%

13.43% 15.17% 19.39% 19.99% 3.24%

17.26% 24.46% 20.28% 17.47% 0.31%

WEEKLY QUOTE: “An acceptable level of unemployment means that the government economist to whom it is acceptable still has a job.” - Unknown This material was prepared by the author and does not necessarily represent the views of the Bank of the Bluegrass & Trust Company, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.