Today - Friday, July 31, 2015
- Pacific Rim officials are nearing the final spurt of Trans-Pacific Partnership negotiations, but differences over dairy exports and exclusivity periods for drugs still need to be resolved before a final deal is reached.
- About 650 officials from 12 nations are taking part in the discussions on the Hawaiian island of Maui. A news conference is scheduled for 7:30 p.m. ET after the last talks are concluded.
- Previously: Trans-Pacific Partnership deal in sight (Jul. 27 2015)
- Investors are bracing for Puerto Rico to miss about $58M in bond payments in the coming days, as the U.S. commonwealth attempts to restructure $72B of debt.
- Saturday's deadline could mark the first skipped payment to bondholders since Governor Alejandro Garcia Padilla deemed the island's debts unsustainable and urged negotiations with creditors.
- Because Saturday is a weekend, payment can be made Monday.
Thursday, July 30, 2015
- The average rate for a 30-year fixed-rate mortgage fell to 3.98% from last week's 4.04%, posting a second straight weekly decline, according to Freddie Mac's latest survey.
- The average rate for the 15-year fixed fell to 3.17% from 3.21% in the prior week.
- A year ago, the respective 30-year and 15-year rates averaged 4.12% and 3.23%.
- Based on the market action, a September rate hike just got somewhat more likely after the first estimate of Q2 GDP growth came in at 2.3%. The print missed estimates, but Q1 was revised to +0.6% from -0.2%, so the full measure of the report could be deemed a beat.
- 30-day Fed Funds futures for October are 12 basis points lower than July, suggesting about a 50/50 chance of a 25 basis point hike when the kids go back to school. January 2016 futures have priced in a 100% chance of a 25 basis point hike, plus the beginnings of a chance of a 2nd boost to rates.
- The 10-year Treasury yield - initially moving up to 2.32% after the GDP number - has slipped back to 2.29%, flat on the session. TLT +0.2%, TBT -0.4%
- ETFs: SHY, IEF, PST, IEI, BIL, TYO, DTYS, UST, VGSH, SHV, VGIT, SCHO, TBX, SCHR, GSY, TYD, ITE, DTYL, DTUS, DTUL, SST, TUZ, DFVL, FIVZ, TBZ, DFVS, TYNS, SYTL
- U.S. economic growth likely rebounded in the second quarter as healthy consumer spending and residential investment offset the drag from trade and the energy sector.
- Experts estimate that after a contraction in the first three months of the year, the economy grew at an annual rate of 2.9% last quarter.
- The Commerce Department will publish the initial GDP figure at 8:30 a.m. ET.
- For the first time, U.S. House Speaker John Boehner has expressed his support for repealing the 40-year-old ban on domestic crude exports, a move that could breathe new life into a bill in his chamber.
- "Until recently our nation's energy policy was rooted in a scarcity mindset that went back to the 1970s," Boehner told reporters. "But now America is experiencing an energy boom and our policy needs to follow suit."
- The House will start working on wider energy legislation when it returns after the August recess.
- Crude futures flat at $48.80/bbl.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
- The Export-Import bank will stay shuttered for the rest of the summer after the House of Representatives passed a highway funding bill that excluded a measure to save the lender
- As a result, several corporations - the latest Boeing - are considering moving work overseas given the federal credit agency's uncertain future.
- Ex-Im provided $27.4B in financing to support U.S. exports in fiscal year 2014.
Wednesday, July 29, 2015
- As expected, the FOMC left rates unchanged, but didn't commit itself one way or the other to any action in September. This could be interpreted dovishly as one might suppose today's statement would begin to lay the groundwork for a September hike were that the Fed's intention.
- The Dow (DIA +0.5%), S&P 500 (SPY +0.5%), and Nasdaq 100 (QQQ +0.1%) all added a few points in the immediate aftermath of the 2 ET statement, but have returned to levels seen before the news.
- Treasurys continue to take on water, with the 10-year yield up five basis points on the session to 2.30%. TLT -0.6%, TBT +1.2%
- Fed Funds futures are pricing in about a 1-in-3 chance of a 25 basis points move in September.
- In a unanimous decision the FOMC leaves in place the 0-0.25% target range for the Fed Funds rate.
- Policymakers continue to see an improving economy and labor situation, suggesting the possibility of a hike at the next meeting (mid-September) is on the table (as is the chance of no action).
- FOMC Statement
- Sales orders gained a fast 22% year-over-year in the quarter ended June 30, writes Kris Hudson, lower than some analysts had hoped, but still a strong number. Sequentially though, orders for D.R. Horton, PulteGroup (NYSE:PHM), M/I Homes (NYSE:MHO), and NVR all slowed, according to Housing ResearchCenter, though normal seasonality would call for an increase. Higher interest rates are likely to blame.
- D.R. Horton's average sales price of $289K rose 2.9% Y/Y, keeping in place a pattern of low-single digit gains over the past year. It's not necessarily that builders are lowering prices, but the mix has changed, with D.R. Horton in particular building larger numbers of less-expensive homes. The company's Express brand of entry-level homes - started in 2013 - accounted for 19% of orders in the last quarter. Still the percentage of first-time homebuyers of 41% was flat Y/Y, and down from 44% two years ago.
- Credit remains tough to come by, with the average FICO score of D.R. Horton-originated mortgages of 716 last quarter vs. 719 a year ago and 723 two years ago.
- ETFs: ITB, XHB
- Previously: D.R. Horton profit nearly doubles (July 28)
- All eyes on Wall Street will be on the Federal Reserve's policy statement today, as investors comb through clues to determine when a rate liftoff will begin and how aggressive the tightening cycle will be.
- Although the announcement is expected to point to a growing U.S. economy and stronger job market, a slew of fresh employment, inflation and GDP reports are still on the schedule before the Fed's highly anticipated September meeting.
- Today's statement will take place at 2:00 p.m. ET.
- A disorderly resolution to Puerto Rico's debt problems would be costly not only for the territory but for the United States as a whole, Treasury Secretary Jack Lew said in a letter to the Senate Finance Committee.
- "The continued deterioration...has the potential to further harm retiree investment portfolios across the country," he added.
- Attempts to grant the commonwealth's public authorities access to Chapter 9 bankruptcy provisions has so far made little progress.
Tuesday, July 28, 2015
- The Conference Board Consumer Confidence Index tumbled to 90.9 in July, down from 99.8% in June, and missed expectations for just a minor decline to 99.1.
- The Conference Board's Lynn Franco notes a less optimistic outlook for the labor market combined with macro jitters out of Greece and China, but the Index remains at levels associated with an expanding economy and relatively confident consumer.
- Those expecting business conditions to improve over the next six months fell to 14.7% from 17.9%, while those expecting conditions to worsen rose to 10.7% from 10.2%.
- The 10-year Treasury yield remains higher by four basis points to 2.26%. TLT -0.8%, TBT +1.6%
- Previously: Consumer Confidence decline in July at 90.9 (July 28)
Visit Seeking Alpha’s new Earnings Center
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs