U.S. and World News
- Heightened volatility continued in Chinese equity markets this week as government intervention was unable to prevent the Shanghai Composite from posting its worst month in six years as the index fell 14%. Chinese regulators said they were prepared to lend further support to markets, while the central bank injected cash into the money markets and hinted at further easing. In addition, China’s securities regulators said it has launched a probe into automated trading, restricting accounts suspected of “influencing securities trading prices.”
- Greece’s financial markets are finally set to reopen on Monday August 3rd after being closed since June 28th. Already dealing with dissention in his own Syriza party, Prime Minister Alexis Tsipras was informed on Friday by the International Monetary Fund that Greece’s high debt levels and current record of implementing reforms disqualify it from a third bailout. The IMF will still take part in the bailout negotiations that are underway, but will not decide whether to agree to a new program for a few months.
- The Federal Reserve meeting this month produced little insight into when the Committee plans on raising the Federal Funds Rate. Policymakers continued to see an improving economy and labor situation but said that it requires additional improvement in labor market conditions before ‘liftoff’. The Committee also noted concerns about ‘international developments’, most likely referencing the summer’s Greek drama and the volatility in China’s stock markets.
- Equity markets rose moderately this week. The S&P 500 gained 1.18%, closing at 2,104. Likewise, the Dow Jones rose 0.69% and closed at 17,689. Year to date, the S&P is up 3.35% and the Dow is up 0.56%.
- Yields in the Treasury markets dipped this week. The 10 year Treasury bond now yields 2.19% and the 5 year Treasury bond yields 1.54%.
- The spot price of WTI Crude Oil fell again this week, dropping 2.72% and closed at a 52-week low of $46.83 per barrel. In 2015, WTI Oil prices are down 18.56%.
- Once again, the spot price of Gold fell, decreasing by 0.30% and closing at $1,095.80 per ounce. Year to date, gold prices are down 7.48%.
- Initial jobless claims came in at 267,000 which was an increase from the prior week’s figure of 255,000. 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 275,000.
- Real Gross Domestic Product increased by 2.3% (quarter over quarter) in the 2nd quarter, boosted by a solid increase of 2.9% in consumer spending. The figure for the 1st quarter GDP was revised upwards from -0.2% to +0.6%.
- The Case-Shiller home price index declined 0.2% in May, disappointing against consensus estimates of a gain of 0.3%. Half of the 20 cities in the index showed price gains. Over the last 12 months, home prices in the index have risen 4.9%.
- The Employment Cost Index (measure of wage growth) rose just 0.2% in the 2nd quarter which was below consensus expectations. With the Federal Reserve signaling that more improvement in inflation data is necessary for a September increase in the Fed Funds Rate, many analysts believe that this data point bring down the odds of that occurring, pushing the most likely ‘liftoff’ date to December.
Fact of the Week
- The United States’ total outstanding debt has increased 91% over the last 7 years, an increase of 9.7% per year. The national debt has risen from $9.49 trillion on June 30, 2008 to $18.15 trillion as of June 30, 2015. (Source: Treasury Department)
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