July 3rd – Weekly Update

  • U.S. equities and gold experienced a flat week as oil shot up following a significant cut in U.S. production. The 10-year U.S. Treasury yield closed at approximately 2.32%.
  • New York Federal Reserve president William Dudley commented during the week that financial conditions are a key transmission channel of monetary policy given that they influence economic activity and the economic outlook. Dudley argued that policymakers need to take the evolution of financial conditions into consideration and noted that when conditions ease it can provide additional impetus for the decision to continue removing policy accommodation.
  • Pending home sales fell 0.8% month-over-month in May continuing April’s 1.3% decline and coming in worse than consensus for a 0.5% rise. Pending home sales dropped 1.7% year-over-year following April’s 3.3% 12-month decline.
  • The core personal consumption expenditure (PCE) price index for May rose 0.1%, in line with consensus and with April’s reading. Core PCE was up 1.4% year-over-year, the lowest annual reading since December 2015.
  • The June consumer confidence index (CCI) came in at 118.9, better than May’s 117.6 level and ahead of consensus for 116.0. The indicator dipped in April as well from its March high of 124.6. The present situation index increased from 140.6 to 146.3, its highest level since 2001. The percentage of consumers saying business conditions are “good” rose to 30.8% from 29.8% in the prior report. The expectations index, however, ticked down to 100.6 in June vs. May’s 102.3 reading.
  • Headline durable goods orders dropped 1.1% month-to-month in May, worse than expectations for a 0.6% decrease and the biggest drop in six months. Negative revision for April with durable goods orders was down 0.9% vs. a previously reported 0.8% decline. Excluding the volatile transportation category, orders increased 0.1% vs. the 0.4% gain expected.
  • Personal income rose 0.4% in May, better than April’s downwardly revised 0.3% increase (had been 0.4%) and ahead of consensus for 0.3%. The rise was largely attributable to increases in personal dividend income, compensation of employees and nonfarm proprietors’ income. The personal savings rate saw a notable bump in May to 5.5% of disposable personal income vs. April’s 5.0%.

CPWM Weekly Market Monitor (2017.07.03)