The steady drip of not so positive or at best, mixed economic news has continued this week. Here is a quick recap of what has been reported so far:
- Spanish and Italian Bond Yields Soar. On Wednesday, 10-year Spanish bond yields hit a euro-era record of 7% as investors fled to assets promising more safety. Italian 10-year bond yields have also risen by five basis points to 6.3% plus Italian borrowing costs at an auction of 4.5 billion euros of new debt also soared. In other words, confidence in European debt is continuing to deteriorate.
- Foreclosure Filings Spike Higher. RealtyTrac has reported that foreclosure filings in May spiked 9% compared with April as 205,990 properties in the US received filings ranging from default notices, scheduled auctions and bank repossessions. That was the first monthly rise since January plus there was a 12% jump in foreclosure starts. Bank repossessions also rose steeply by 7% to 54,844 after hitting a four-year low the month before.
- Retail Sales Were Mixed. US retail sales fell 0.2% in April and May thanks to a sharp drop in gas prices. When volatile gas sales are excluded, consumers barely increased their spending but sales of cars, furniture and appliances did increase - suggesting that consumers could be gaining more confidence in the economy. Nevertheless, consumer spending could weaken if income growth does not show signs of reviving.
- CPI Falls Sharply. This morning, the Labor Department reported that US consumer prices fell 0.3% in May, its biggest decline in three and a half years, thanks to a fall in gas prices as the gas index sank 6.8% - its largest decline since December 2008. It was also reported that inflation-adjusted hourly wages (on average) rose 0.3% in May thanks to a 0.1% rise in average hourly earnings and a 0.3% fall in the cost of living.
- Jobless Claims Rise. The Labor Department has also reported that initial claims for unemployment benefits rose 6,000 to a seasonally adjusted 386,000 while the 4-week moving average increased 3,500 to 382,000 from the previous week's revised average of 378,500. Claims have remained in the tight band since April with job growth in May being the weakest in a year after a weak performance in April.
In other words and as we head into summer and into an election year, the economy is looking weak but not completely bleak. Hence, it will be important to keep an eye on the latest economic headlines as well as our NextCandle.com stock predictions as the stock market is bound to be in for more choppy sessions.
NOTE: THIS PIECE WAS JUST POSTED ON THE NEXTCANDLE.COM BLOG.