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Weekly Update – August 23, 2019

  • Stocks closed in the red on what would have been a positive week after renewed U.S.-China trade tensions on Friday sent jitters across markets. Otherwise, stronger U.S. home sales and other leading indicators that helped counter last week’s curve-inversion worries were counterbalanced by disappointing manufacturing statistics and substantially lowered estimates of job gains. The European Central Bank reassured investors that stimulus was on the way, and all eyes then turned to the Jackson Hole symposium, where Federal Reserve Chair Powell spoke on Friday.
  • China on Friday announced retaliatory tariffs against about $75 billion worth of U.S. goods in response to recent U.S.- imposed tariffs on an additional $300 billion worth of Chinese goods. President Trump responded to China’s announcement by saying he would announce countermeasures of his own and ordered U.S. companies to immediately start looking to shift production back to U.S.
  • Gold prices rose for the week, whereas oil prices declined. The 10-year Treasury yield declined to 1.523%. The U.S. dollar declined against a basket of currencies.
  • The Conference Board’s index of U.S. leading economic indicators increased 0.5% in July to 112.2 following 0.1% declines in May and June. The July readings of the coincident and lagging indicators were up 0.2% and 0.6%, respectively. The upswings pointed to moderate growth in the second half of 2019.
  • The National Association of Realtors reported that existing home sales rose 2.5% in July over June to an annual rate of 5.42 million, the first increase after 16 consecutive months of year-over-year declines. Economists suggested that lower mortgage rates were beginning to lift sales. According to Freddie Mac, the average 30-year fixed mortgage rate in July was 3.77%, down from 4.46% six months ago.
  • U.S. business activity weakened in August, producing the slowest growth of new orders in a decade, according to IHS Markit. The Flash U.S. Services Business Activity Index eased to a three-month low from 53.0 in July to 50.9 in August. Flash U.S. Manufacturing PMI slipped from 50.4 in July to 49.9, a 119-month low. By contrast, the Flash U.S. Manufacturing Output Index rose slightly from 50.5 in July to 50.6

 

CPWM Weekly Market Monitor (2019.08.23)

 

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