U.S. and World News
- Europe stands by and awaits the vote that will take place Sunday evening to decide in referendum on creditors’ proposals for unblocking aid to Greece, in a vote which could decide the country’s future in the euro area.
- Not to be outdone by Greece, Puerto Rico is also embroiled in a debt crisis. The U.S. commonwealth has $72 billion in debt which is nearly 70% of its economic output. While they made all debt payments due this week, Governor Alejandro García Padilla said in a speech that it will seek to delay future payments on its debt for a number of years as part of a plan to bolster Puerto Rico’s finances and revive its economy. Padilla also appealed to Washington to make significant changes to bankruptcy rules currently in place. Although U.S. cities and municipalities are eligible to file for bankruptcy, states and commonwealths such as Puerto Rico are barred from seeking bankruptcy protection.
- After its equity markets entered correction territory, the People’s Bank of China has again cut interest rates. The Chinese central bank cut the benchmark lending rate and the one-year deposit rate over the weekend. Additionally, Chinese regulators are now considering suspending initial public offerings in an attempt to stabilize the country’s fragile equity markets.
- Equity markets once again are down for the week. The S&P 500 lost 1.21%, closing at 2,077. Similarly, the Dow Jones fell by 0.90% and closed at 17,730. Year to date, the S&P is up 0.87% and the Dow is up 0.52%.
- Yields in the Treasury markets fell this week and ended lower than the week prior. The 10 year Treasury bond now yields 2.38% and the 5 year Treasury bond yields 1.63%.
- The spot price of WTI Crude Oil fell dramatically this week by 6.89%, closing at $55.52 per barrel. In 2015, WTI Oil prices are down 2.37%.
- The spot price of Gold slightly decreased this week by 0.58% and closed at $1,168.67 per ounce. Year to date, gold prices are down 1.33%.
- Initial jobless claims came in at 281,000 which was an increase from the prior figure of 271,000 and above consensus expectations of 270,000. The Labor Department noted that no special factors affected claims this week. The four week moving average for claims now stands at 274,750.
- The Case-Shiller home price rose 0.3% in April, lower than expectations of 0.8%. Prices rose in 11 of 20 cities in the index. Over the last 12 months home prices have risen 4.9%.
- Pending home sales rose 0.9% in May, slightly less than expectations of 1.0%. Sales rose in the Northeast and West regions but fell in the South and Midwest. Pending sales are based on signings rather than closings so they are seen as a leading indicator of existing home sales. Over the last year, pending home sales rose 8.3%.
- The U.S. unemployment rate fell to 5.3% in June, though labor force participation decline to 62.6%. Nonfarm payrolls came in at 223,000 which was an increase from the prior number of 280,000, but was below the expectations of 233,000.
Fact of the Week
- The phrase ‘dry powder’ is often used in the investment and banking world to mean having excess cash on hand in case a buying opportunity arises. Originally coined in the mid-1600’s English military leader Oliver Cromwell, the full maxim went, “Put your trust in God, my boys, and always keep your powder dry!” In the middle of the invasion of Ireland by England, Cromwell meant quite literally for his soldier’s to keep their gun powder dry.
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