- During a press conference this week, Federal Reserve Chairman Ben Bernanke set out to soothe market fears of asset purchase tapering by saying “that highly accommodative monetary policy for the foreseeable future is what’s needed for the U.S. economy.” There wasn’t anything in the comments that deviated too far from previous statements but markets rallied on the clarification of intended policy.
- After almost two years of preparation, the U.S. and Europe have begun talks on what would be the world’s largest free-trade agreement. Should a deal be struck, the regions could see its economies boosted by an estimated $100 billion a year.
- Portugal’s government is looking more secure after Paulo Portas, the head of the junior partner in the government’s coalition, returned to the cabinet as Deputy Prime Minister. Portas’ austerity induced resignation as Foreign Minister last week, along with that of Finance Minister Vitor Gaspar, had helped to roil global markets.
- Stock markets posted another strong week as the S&P 500 Index rose 2.96%, closing at 1680. The Dow Jones Industrial Average was up 2.17% to close at 15,464. After this week’s rally, the S&P and the Dow respectively are up 17.81% and 18.01% year to date.
- Treasury yields fell this week following Ben Bernanke’s dovish comments calmed fixed income markets. The 5 year and 10 year treasury finished the week at 1.42% and 2.59% respectively. Interest rates continue to be quite volatile and are swinging on nearly every comment about the Fed tapering their asset purchases.
- The spot price of WTI Crude Oil rose this week, continuing the upward trend that started with last week’s unrest in Egypt. Prices increased by 2.76%, closing at $106.07 per barrel. Year to date, oil is up 13.10%.
- The spot price of Gold bounced this week, rising by 5.0% and closing at $1284.22/ounce. Despite the gains, gold is still down 23.3% this year.
- Weekly Initial Jobless Claims rose unexpectedly this week, rising by 17,000 and came in at 360,000 vs. expectations of 340,000. However, the Labor Department noted that seasonality factors may have distorted the data. The 4-week moving average of jobless claims remained at moved up to 352,000.
- Trade data out of China was much worse than expected this week as China’s exports fell 3.1% in June vs. expectations of a GAIN of 4%. Imports also disappointed, falling 0.7% in June vs. forecasts of +8%. A stronger Chinese currency and rising wages were cited as reasons for the big miss.
- Foreclosure activity dropped in June to the lowest level since December 2006, falling 35% on the year to 127,790 properties according to RealtyTrac.
Fact of the Week
- Employees that obtain health insurance coverage through their employer do not pay taxes on the economic benefit on the part of their coverage paid for by their employer. This exclusion from taxation saves U.S. taxpayers $164 billion a year, the largest tax expenditure in the U.S. tax code.
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