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Events
This Week:
Inflation
Low
Home
Sales Up
Jobless
Claims Fell
Manufacturing
Mixed
Events
Next Week:
Tues
6/1
ISM Manuf
Wed 6/2
Pending Sales
Thur 6/3
ISM Services
Productivity
Fri 6/4
Employment
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China
Reassures about European Debt
The
economic data took a backseat to events in Europe again this week. Improved
sentiment about the troubles in Europe influenced the willingness of
investors to purchase riskier assets such as stocks, hurting bond markets.
As a result, after dropping to the lowest levels of the year, mortgage
rates ended the week a little higher.
A report
on Wednesday that China was considering a move to reduce its holdings of
European debt rattled global financial markets. There had been speculation
in recent weeks that China, with the largest pool of foreign exchange
reserves in the world, might cut its exposure to European debt. Thursday,
however, Chinese officials made rare public comments that China was not
planning to make any changes to its portfolio of European investments.
Relieved global investors responded by embracing riskier assets such as
stocks and partially reversing the effects from a flight to safer assets,
such as bonds and mortgage-backed securities (MBS), seen over the last few
weeks.
This
week's news from the housing sector was mostly positive. April Existing
Home Sales rose 8% to an annual rate of 5.77 million units, the highest
level in five months. Inventories of unsold existing homes increased a
little, but the median home price was 4% higher than one year ago.
First-time buyers accounted for 49% of all existing home sales. April New
Home Sales rose 15% to an annual rate of 504K units, above the consensus
forecast of 425K, and the highest level since May 2008. The homebuyer tax
credit helped boost sales before its April 30 deadline.
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Also Notable:
- The jobless rate increased in only 6 states in
April
- The Core PCE inflation index increased at a low
1.2% annual rate
- Oil prices rose to $75 per barrel, up from a low
of $65 per barrel last week
- The Fed's Bullard suggested that European
troubles will have a limited impact on the US recovery
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Average
30 yr fixed rate:
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Last
week:
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-0.20%
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This week:
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+0.15%
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Stocks
(weekly):
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Dow:
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10,200
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+100
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NASDAQ:
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2,250
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+25
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Week
Ahead
The
biggest economic event next week will be the important Employment report on
Friday. As usual, this data on the number of jobs, the Unemployment Rate,
and wage inflation will be the most highly anticipated economic data of the
month. Early estimates are for an increase of about 500K new jobs in May,
of which 300K are the hiring of temporary census
workers by the government. Before the employment data, the ISM
manufacturing index will be released on Tuesday. Pending Home Sales, a
leading indicator for the housing market, will come out on Wednesday. ISM
Services will be released on Thursday. Productivity, Construction Spending
and Factory Orders will round out the schedule. MBS markets will be closed
on Monday for Memorial Day.
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