Weekly Economic Update for August 27, 2012

August 27, 2012  |   News

Weekly Economic Update August 27, 2012

MORE HOMEBUYING IN JULY
Census Bureau data showed new home sales increasing 3.6% in July to a two-year peak, with an annual gain of 25%. In addition, the National Association of Realtors reported a 2.3% gain in existing home sales last month; residential resales were 10% improved from 12 months ago. The latest edition of the Federal Housing Finance Agency’s Home Price Index showed prices 1.8% higher for the second quarter (the best quarter since Q4 2005) and 3.0% higher year-over-year.1,2

DURABLE GOODS ORDERS SEND MIXED MESSAGE
Overall hard goods orders rose 4.2% in July, but they fell 0.4% for the month with transportation orders subtracted. Core capital goods orders fell 3.4% in July, the most severe monthly decline since November and the fourth retreat in five months.3

DID THE FED HINT AT QE3 … OR NOT?
The August 1 Federal Reserve policy minutes noted: “Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.” Does that imply QE3? Not according to St. Louis Fed president James Bullard, who dismissed the minutes as “stale” on Thursday and noted that stocks are “looking at all-time highs”. Friday, however, the Wall Street Journal cited a letter from Fed Chairman Ben Bernanke noting that there was “scope for further action” by the Fed to “ease financial conditions and strengthen the recovery.” Investors are hoping for a decisive FOMC move in September.4,5,6

MARKET PULLS BACK
All three major U.S. indexes retreated last week, as follows: DJIA, -0.88% to 13,159.02; S&P 500, -0.46% to 1,411.68; NASDAQ, -0.19% to 3,070.73. In the commodities markets, COMEX gold gained 3.30% on the week while NYMEX crude rose 0.15%; gold ended the week at $1,672.90, oil at $96.15. A gallon of unleaded averaged $3.73 nationwide Friday.7,8

THIS WEEK: 
Monday, Tiffany announces Q2 earnings. Tuesday brings June’s S&P/Case-Shiller Home Price Index and the Conference Board’s August consumer confidence survey. Wednesday offers the latest Fed Beige Book, numbers on July’s pending home sales from the NAR and the second estimate of Q2 GDP from the federal government; TiVo, Pandora and Heinz issue earnings reports. July consumer spending figures are out on Thursday in addition to the weekly jobless claims report. Friday, Ben Bernanke speaks at the Fed’s annual Jackson Hole symposium and the final August University of Michigan consumer sentiment index arrives.


Sources: money.msn.com, bigcharts.com, treasury.gov, treasurydirect.gov – 8/24/127,9,10,11
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These returns do not include dividends.

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Citations.
1 – www.nytimes.com/2012/08/24/business/economy/claims-for-jobless-benefits-rise.html [8/24/12]
2 – www.bloomberg.com/news/2012-08-23/house-prices-rose-most-since-2005-in-second-quarter-fhfa.html [8/23/12]
3 – www.mysanantonio.com/news/article/Drop-in-key-US-durable-goods-orders-shows-weakness-3812413.php [8/24/12]
4 – www.sfgate.com/business/bloomberg/article/Many-on-FOMC-Favored-Easing-Soon-If-No-Sustained-3808030.php [8/23/12]
5 – www.bloomberg.com/news/2012-08-23/fed-s-bullard-says-fomc-minutes-stale-economy-stronger.html [8/23/12]
6 – www.ajc.com/business/a-word-from-bernanke-1505404.html [8/24/12]
7 – money.msn.com/market-news/post.aspx?post=a498bd60-281a-4ee6-8fdc-80e3ddb041b7 [8/24/12]
8 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F24%2F11&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F24%2F07&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
9 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F23%2F02&x=0&y=0 [8/24/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/24/12]
10 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/24/12]
11 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]

 

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