U.S. and World News
- The Eurozone and Greece have agreed in principle to a third bailout deal that will keep the country in the Euro currency for the time being. After a near total capitulation by Prime Minister Alexis Tsipras, Greece will have to put €50 billion of state assets in a trust fund so that they can be sold off in order to pay down debt. In addition, a slate of austerity measures (more stringent than the set of measures voted down in last week’s referendum vote) was required to be passed through Greece’s parliament and was successful despite protests in Athens before the vote. Greek banks are finally expected to reopen on Monday, however capital controls will remain in place, limiting how much Greek depositors are allowed to withdraw.
- Iran and major world powers (including the U.S.) have reached a historic nuclear deal following more than two weeks of negotiations in Vienna. As part of the deal, Iran will have to stall its nuclear program and submit to regular inspections to ensure no nuclear weapons are being developed. In exchange, Iran will receive an easing of its international trade sanctions, allowing the oil-rich nation to reenter the global energy markets and boost its oil exports as well as having greater access to international investment. While analysts believe that global oil markets won’t feel the real impact of Iran’s potential 500,000 barrels/day production until 2016, oil prices have been under pressure since the deal was reached.
- Economic growth in China proved to be resilient in the 2nd quarter as GDP rose 7.0%. Aided by policy makers stepping up support for the country’s stock market during some harshly negative action, China is on pace to meet its 2015 growth target of about 7%. Though despite the better than expected growth figure, Chinese shares remained volatile and around 700 stocks (about 25% of the country’s listed stocks) remain halted for trading in an effort to slow losses.
- Equity markets rallied this week on the temporary resolution to the Greek drama. The S&P 500 gained 2.42%, closing at 2,127. Similarly, the Dow Jones rose by 1.86% and closed at 18,086. Year to date, the S&P is up 4.42% and the Dow is up 2.79%.
- Yields in the Treasury markets stabilized this week as the Greek induced volatility subsided. The 10 year Treasury bond now yields 2.35% and the 5 year Treasury bond yields 1.68%.
- The spot price of WTI Crude Oil fell again this week on news of the Iran deal. Prices were down 3.51% and closed at $50.89 per barrel. In 2015, WTI Oil prices are down 10.51%.
- The spot price of Gold fell to a 52 week low, declining by 2.54% and closing at $1,134.14 per ounce. Year to date, gold prices are down 4.24%.
- Initial jobless claims came in at 281,000 which was a decrease from the prior week’s figure of 297,000. The Labor Department noted that no special factors affected claims this week. The four week moving average for claims now stands at 282,500.
- Housing starts rebounded in June from May’s sharply negative print, showing a gain of 9.8%, beating estimates of 6.7%. The single family category declined 0.9% while the multifamily segment showed an increase of 29.4%.
- The headline Consumer Price Index (measure of inflation) rose 0.3% in June, boosted by a 3.4% increase in gas prices and was in line with expectations. Core CPI (excludes food and energy) rose 0.2% in June, also in line with expectations. Over the past 12 months, headline CPI has risen 0.1% and core CPI has risen 1.8% (near the Federal Reserve’s 2% target).
- Retail sales declined 0.3% in June, which was worse than consensus expectations of a 0.3% increase. Sales of home furnishings (-1.6%), apparel (-1.5%), autos (-1.1%) and building materials (-1.3%) were largely responsible for the lower than expected figure.
Fact of the Week
- The labor force participation rate measures the percentage of the unretired civilian adult population that is either working or looking for work. In the U.S., the figure hit its lowest level since October 1977 when the June employment report showed a 62.6% participation rate. Meanwhile, the beleaguered commonwealth of Puerto Rico shows a participation rate of 40% according to the most recent data (Source: Department of Labor)
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