August 22nd – Weekly Update

  • After an upbeat week, major equity indexes posted marginal losses following a down day on Friday as investors grappled with the pressing question of when the next Federal Reserve (Fed) rate hike will be. The S&P 500 and Dow Jones Industrial Average both experienced a slight loss for the period. International stocks also took a hit with the STOXX Europe 600 trailing the U.S. equity indexes. The yield on the U.S. 10-year Treasury note closed on Friday at approximately 1.58%. Oil prices advanced significantly while gold was relatively flat.
  • The release of the July Federal Open Market Committee (FOMC) minutes reiterated the Fed’s position that, prior to the next hike, economic data must confidently imply that the economy can withstand the potential implications of a rate increase.
  • The U.S. housing market expressed mixed signals during the week. The National Association of Home Builders trade group measured a two-point rise in home builder confidence from 58 to 60 comparing July to August. However, a 0.1% decline in building permits in June, compared to economists’ forecast of a 0.6% gain, echoes the unpredictability of home sales and construction.
  • U.S. industrial production advanced 0.7% in July, the largest advancement since November 2014.
  • During June, euro zone exports fell by 2.2%, imports were down 5%.
  • Markit’s U.K. Household Finance Index (HFI) which measures insights about household spending was 44.9 in August (up from 44.3 in July) implying a continuing recovery of financial perceptions in the U.K. While the score is still below the threshold of 50.0, it is the highest in four months.
  • Core U.S. consumer price index (CPI) data, which strips out food and energy costs, cited a year- over-year July increase of 2.2%. The core U.K. CPI rose 1.3% during the same period and the core euro zone annual CPI remained unchanged at 0.9%.
  • Japan’s economy expanded at a disappointing annualized rate of 0.2% during 2Q 2016, weaker than the 2% expansion gained during the first three months of the year. Machine tool orders in Japan fell for the 12th consecutive month dropping 19.70% in July on an annual basis.

CPWM Weekly Market Monitor (2016.08.22)