U.S. and World News
- Chinese markets continued to whip around this week, posting large gains and losses during the week. China’s government continues to intervene, participating in stock purchases of their own and also authorizing local pension funds to invest in the stock market. Additionally, the People’s Bank of China stepped in again to try to stabilize its markets by cutting interest rates for the fifth time since November and lowering banks’ reserve requirements.
- The Federal Reserve’s annual economic policy conference in Jackson Hole, Wyoming kicked off on Thursday and will run through Saturday. With Fed Chair Janet Yellen skipping the conference, focus will be on Vice Chairman Stanley Fischer for signals about the likely timing of an interest rate increase. While the topic of the this year’s conference is “Inflation Dynamics and Monetary Policy”, speakers are also expected to touch upon China’s devalued currency, the collapse in oil prices and recent global market turmoil.
- Equity markets plunged early in the week, before staging a comeback in the back half of the week. The S&P 500 ended the week up 0.93%, closing at 1,989. Similarly, the Dow Jones rose 1.11% and closed at 16,643. Year to date, the S&P is down 2.09% and the Dow is down 5.08%.
- Yields in the Treasury markets rose this week. The 10 year Treasury bond now yields 2.19% while the 5 year Treasury bond now yields 1.53%.
- The spot price of WTI Crude Oil rallied along with equity markets late in the week. Prices rose by 12.01%, closing at $45.31 per barrel. In 2015, WTI Oil prices are down 22.05%.
- The spot price of Gold declined this week, falling 2.28% and closing at $1,134.29 per ounce. Year to date, gold prices are down 4.23%.
- Initial jobless claims came in at 271,000 which was a decrease from the prior week’s figure of 277,000. The Labor Department noted that there were no special factors that affected the claims figure. The four week moving average for claims now stands at 272,500.
- The estimate for 2nd quarter GDP has been revised up to 3.7% from a previous estimate of 2.3%. Growth in consumer spending, business and residential investment and government spending all were revised higher.
- The Case-Shiller home price index declined 0.1% in June, less than consensus expectations of a 0.1% increase. Prices fell in 10 of the 20 cities covered by the index. Over the last year, the index has shown home prices increasing a solid 5.0%.
- The Core PCE index (one of the favored measures of inflation by the Federal Reserve) disappointed with a gain of only 0.1% in July. Core PCE inflation has now fallen to the lowest level it’s been since March 2011. By this measure, core prices (excluding food and energy) have only risen 1.2% over the last year, well below the Fed’s 2% inflation target.
Fact of the Week
- In 2015 there are 36 Social Security beneficiaries for every 100 covered workers paying payroll taxes contributing to the Social Security fund. It is estimated that by 2030, there will be 45 Social Security beneficiaries for every 100 covered workers. (Source: Social Security Trustees 2015 Report)
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