Today - 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)
- The Federal Reserve begins a two-day policy meeting later in the day, as officials from the central bank continue their long, slow march toward raising interest rates.
- Investors are not expecting any major decisions this week, but they will be looking for hints on the Fed's timing for possible future movements.
- While consensus for a rate rise is leaning towards September, a growing number of market watchers are suggesting two rate increases may be in the cards this year.
Monday, July 27, 2015
- July Dallas Fed Manufacturing Outlook: -4.6 vs. -7.0 in June.
- Production: -1.9 vs. -6.5 prior.
- Capacity Utilization: -4.2 vs. -6.1 prior.
- New Orders +0.7 vs. -10.3 prior.
- The general business activity rose for the consecutive month, manufacturers expect improved conditions ahead and outlook index surged nearly nine points and posted its first positive reading in seven months at 1.2.
- Is it a debt or deficit problem? Puerto Rico's bondholders and three former IMF economists have presented a rival recovery plan for the U.S. commonwealth, stating it could move to a surplus by fiscal 2017.
- The new study argues that the island could avoid a restructuring by eliminating its deficit, but acknowledges that it's cash strapped in the short term and would need some kind of financing to bridge the gap.
- In a rare weekend session, the U.S. Senate voted on Sunday to advance legislation that would resurrect the Export-Import Bank, whose charter expired on June 30 and was not renewed by Congress.
- The bipartisan vote allowed supporters to attach a measure reauthorizing the federal credit agency to an unrelated three-year highway and infrastructure bill, which is expected to pass the Senate early this week.
- Following five long years of negotiations, the Trans-Pacific Partnership will go down to the wire this week, as Pacific Rim officials meet in Hawaii for talks that could make or break the deal.
- The toughest issues have been left until last, including monopoly periods, preferential treatment for state-owned companies and opening protected markets to competition.
- TPP would cover 40% of the world's economy, including the U.S., Japan and ten other Pacific nations.
Friday, July 24, 2015
- Economic projections prepared by Fed staff for the June 16-17 FOMC meeting were "inadvertently" available on the Fed website on June 29. They're typically made public with a five-year lag.
- The quick read shows the staff numbers to have a more dovish tilt than that of most FOMC members, with the staff projecting a Fed Funds rate of 0.35% at year-end, and 1.26% at the close of 2016. The staff also sees inflation below the central bank's 2% target through at least 2020.
- The matter has been referred to the Fed's Inspector General.
- Sales of new single-family homes in June at a seasonally-adjusted annualized rate of 482K were 6.8% below the May pace of 517K and 18.1% above the number one year ago. The 482K print is the weakest since November 2014.
- In a further bit of weakness, May's rate of 517K was originally estimated at 546K.
- The median sales price of $281.8K slipped 1.8% from a year ago. The supply of new homes for sale was 5.4 months, up from 4.8 months in May.
- Breaking down sales by region: Northeast 32K in June vs. 25K in May; Midwest 56K vs. 63K; South 282K vs. 294K; West 112K vs. 135K.
- Treasury prices are snoozing through the news - the 10-year yield remains flat at 2.27%. TLT +0.1%
- Homebuilders, however, are selling off, with the ITB -1.1%, and the XHB -0.5%.
- Following downgrades by major credit rating agencies, UBS is backing away from its Puerto Rico bond funds, warning clients that they can no longer use them as collateral.
- By doing so, the bank is effectively admitting that it sold a bad product and that the funds are too risky for itself and average investors, lawyers said.
- Puerto Rico has been looking to restructure and postpone bond payments since dropping a bombshell on holders of its $72B debt in June.
- World Trade Organization members have finalized a deal to cut tariffs on $1T worth of information technology products.
- The agreement adds more than 200 items to the list of goods covered by zero-tariff and duty-free trade, including computer software, GPS devices and medical equipment.
- U.S. trade officials say the new deal covers more than $100B of American exports and could support up to 60,000 additional jobs.
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