Ricky Cove

The US Census Bureau and Department of Housing and Urban Development report monthly data on the number of new homes sold in the United States.

The United States National Association of Realtors (or NAR) releases a monthly report on the existing home sales (ITB) market.

The HMI was reported to have decreased by two points to 68 in June as compared to a May reading of 70.

Rising interest rates increase the cost of owning a home for prospective buyers, but the housing market hasn’t yet felt the impact of rate increases.

European equity markets didn’t have the same enthusiasm as the euro, as new tariff threats to the European car industry from the Trump administration unnerved investors.

The US bond market continued to rebound as trade tensions and the limited appreciation in equity markets pushed demand for bonds higher, depressing the bond yields for a second consecutive week.

The May LEI reported the average consumer expectations for business conditions of 0.83, a strong rebound from the revised April reading of 0.55.

In the May LEI report, the yield spread had a net impact of 0.14 (or 14.0%).

The Leading Credit Index expanded for the first time in four months in May with a reading of -0.86.

The S&P 500 Index (SPY) rebounded in May, thanks to a stellar earnings season and a de-escalation of trade tensions between the United States and China.

The ISM New Order Index for May was 63.7, rebounding after four consecutive monthly declines, but still below the December peak of 67.4.

The ISM manufacturing (VIS) index was close to the March high of 60.8 and was reported at 58.7 in June.

According to the June 21 Conference Board report, the May LEI was 109.5—a 0.2% increase from the revised April LEI of 109.3.

There is one economic measure at China’s dispense that could force the Trump administration to back away from its aggressive trade policy.

As the United States imported just $130 billion into China last year, it may be difficult for China to directly counter Donald Trump’s threat of imposing tariffs on $200 billion of US imports from China.

Donald Trump added fuel to the trade war fire by announcing that the United States would extend 10% tariffs to $200 billion of Chinese (GXC) imports.

Last week, the Japanese yen (JYN) succumbed to the US dollar’s strength. The Japanese yen (FXY) closed the week at 110.67.

The US Dollar Index (UUP) managed a sharp recovery last week. The appreciation seemed to be due to tariff announcements.

The US bond market had a limited reaction to the Fed’s 25-basis-point rate hike and the 0.20% increase in interest paid on excess reserves.

The total industry capacity utilization in May has fallen from the upward revised April reading of 78.1 to 77.9 in May.

Industrial production in the United States fell 0.1% in May as compared to an increase of 0.9% in April.

The PPI for final demand in May is reported to have increased by 0.5% month-over-month.

The United States Census Bureau releases a monthly report on retail sales in the United States. Let’s take a look at the latest data.

The US Federal Reserve has a dual mandate of achieving maximum employment and stable prices (TIP) in the economy.

The FOMC’s June statement was released on June 13, and the outlook for inflation remained upbeat.

As expected, the Federal Reserve increased the interest rate by 25 basis points after its June meeting, which concluded on June 13.

During the Fed’s May meeting, the inflation (TIP) target was described as “symmetric,” suggesting that the 2% target would not be used to initiate any dramatic changes to US monetary policy.

On June 12, the US Bureau of Labor Statistics reported that US consumer prices rose 0.2% in May, adding to the 0.2% increase seen in April.

The central banks of the US, EU, and Japan are scheduled to meet this week.

The US bond market seems to be benefiting from multiple crises around the world.

As of June 1, the unemployment rate in the US has dropped to 3.8%—its lowest level in the last 18 years.

April’s JOLTS data indicate that there were only 0.9 job seekers for every job available.

According to the April JOLTS report, there were 6.7 million job openings at the end of April compared to 6.6 million in March.

Mexico hit the American economy where it hurts the most with tariffs on American products like pork, steel, apples, potatoes, cheese, and bourbon.

The Japanese yen returned to weakness against the US dollar as political uncertainty in the euro area fell at the end of the week that ended on June 1.

The euro-dollar (FXE) exchange rate managed to move back above 1.16 against the US dollar (UUP).

The US bond market was volatile in May. The ten-year yield reached a peak of 3.1% and fell to a low of 2.8% in a span of three weeks.

In the current economic climate, we can expect the Fed to take a step back with respect to interest rate hikes.

On May 31, the BEA’s report on personal income and spending for April indicated that personal income rose 0.3%.

As per the May ADP employment report, job growth in the professional and business services sector continued to be the key driver for jobs additions.

According to the ADP National Employment Report, the US private sector added 178,000 jobs in May.

The consumer confidence index has increased to 128.0 in May as compared to a downward revised April reading of 125.6.

In a continued effort to deregulate the economy, President Donald Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act.

In the recently concluded first quarter, more than 95% of REITs reported earnings beats and maintained their guidances for 2018.

The real estate sector (VNQ) has been lagging in performance in 2018. It’s seen a year-to-date loss of 6%.

The durable goods orders in April were below the market expectations. The durable goods orders decreased by $4.2 billion or 1.7% to $248.5 billion.

The last three trading sessions in May are likely to be influenced by geopolitical issues rather than economic data.

The US bond market had some relief from its ongoing slide as the Fed’s May meeting minutes were less hawkish than expected.

Global markets mostly fell last week (ended May 25) as political uncertainty kept investors at bay.

Last week, the Japanese yen (JYN) managed its first weekly gain against the US dollar in nine weeks.

The British pound (FXB) depreciated against the US dollar (UUP) for the fifth week in the last six weeks.

Last week, the euro-dollar (FXE) exchange rate moved below 1.16 for the first time in six months.

The US Dollar Index (UUP) continued to appreciate but did so slowly in the week that ended on May 25.

As per the recent report, new single-family homes (XHB) sold in April were at a seasonally adjusted rate of 662,000 units.

The US National Association of Realtors (or NAR) releases a monthly report on the existing home sales (ITB) market.

An increase in the number of building permits in any given month is a signal for increased activity in the housing sector (DHI) in the future.

The housing market index was reported to have increased by two points to 70 in May compared to the downwardly revised April reading of 68.

The FOMC’s May meeting minutes indicated that some of its members had turned bearish on inflation (TIP).

The most recent FOMC meeting was on May 1–2. At the meeting, the range for the federal funds target rate was left unchanged.

China invests the trade surplus it has with its trading partners in US government securities (GOVT).

In discussing the steps that China has agreed to take to help reduce its trade deficit with the United States, Steve Mnuchin said there was “a very good framework agreement.”

Last week, the Japanese yen depreciated against the US dollar for the eighth consecutive week as the dollar continued its upward surge.

Last week, the US dollar index bounced back from a minor pullback in the week ended May 11, aided by the rise of bond yields.

The Conference Board Leading Economic Index (or LEI) has ten constituent indicators and all but one of these forward-looking indicators is based on expectations.

The US bond markets remained under selling pressure as bond yields, especially at the short end of the curve, continued to shoot up, while the long-term yields remained subdued.

The Conference Board uses credit conditions in the economy as one of the components of the leading economic index (or LEI) economic model.

The S&P 500 Index (SPY) continued its negative run with another lower close in April.

In April, the number of building permits issued was reported at 1.35 million, a decrease of 1.8% from the downward revised March reading of 1.37 million permits.

As per the latest Conference Board LEI report, the core capital goods orders for April were valued at $39.1 billion as compared to the downward revised March reading of $39.0 billion.

The ISM New Order Index for April was reported at 61.2, which represented the fourth consecutive monthly decline for the index.

The Conference Board uses average weekly unemployment claims as a constituent of its Leading Economic Index (or LEI).

The latest Conference Board LEI reading was released on May 17. The LEI for April came in at 109.4, an increase of 0.4% from the March reading of 109.0.

US ten-year bond market yields have scaled a new seven-year peak at 3.07, their highest level since July 2011.

All major US indexes had a negative close in the week that ended on May 18. The S&P 500 Index (SPY) fell 0.23%.

According to the Fed’s industrial production and capacity utilization report, capacity utilization increased from 77.6% in March to 78% in April.

The frequency of an asset class making financial headlines is indicative of investor interest.

The April retail sales report was released on May 15, and the surprise reaction to this report was an increase in bond (BND) yields across the board.

The April retail sales report indicated that the gains were broad-based with nine of the 13 major categories moving higher during the month.

Last week, the Japanese yen (JYN) depreciated against the US dollar for a seventh consecutive week, despite US dollar weakness.

The British pound (FXB) was unchanged against the US dollar (UUP) last week despite the dollar’s rally stalling, possibly due to the BOE’s (Bank of England) move to leave policy rates unchanged.

The euro-dollar (FXE) exchange rate closed at 1.2 on May 11, with the euro depreciating by 0.13% against the US dollar (UUP).

The US dollar index (UUP) took a breather last week, closing at 92.44, 0.03% higher than its close of 92.41 in the week ended May 4.

The US dollar depreciated against its major trading-partner currencies after the Bureau of Labor Statistics reported on May 10 that US consumer prices grew 0.1% in April after falling 0.1% in March.

US bond market investors were relieved after the US Bureau of Labor Statistics’ April report, published May 10, indicated a lower-than-expected inflation growth rate.

US indexes (SPY) are reaching highs as investors ignore possible threats of the US pull-out from the Iran nuclear deal and focus on increasing crude prices.

On May 10, the Bureau of Labor Statistics reported that US consumer prices rose 0.2% in April.

US bond market yields continue to trend higher, but their overall movement last week was limited.

For the week that ended May 11, the S&P 500 Index closed at 2,727.72, rising 2.4% compared to its previous week’s close of 2,663.42.

Global markets (ACWI) seem to be ignoring the Iran deal exit for now despite the possibility of risk escalation in the Middle East.

President Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (or JCPOA) could lead to regional conflicts in the Middle East.

In this series, we’ll analyze how the US exit from the Iran deal has affected markets and how recent developments could affect oil prices and volatility.

Last week, the Japanese yen (JYN) depreciated against the US dollar for a sixth consecutive week as the US dollar continued to rally.

The British pound (FXB) depreciated 1.8% against the US dollar (UUP) in April, and has depreciated 1.9% so far in May.

The euro-US dollar (FXE) exchange rate closed at 1.19 on May 7, with the euro depreciating 1.4% against the dollar (UUP) in May following a 2.0% decline in April.

In April, the US dollar index posted one of its best monthly gains (2.0%) since November 2016, and it looks set to continue with the trend this month.

The FOMC expects US labor market conditions to remain strong.

In its most recent SEP release, the Fed upgraded its GDP growth outlook for 2018 by 0.2% to 2.7%, compared to the 2.5% growth outlook in December 2017.

For the week ending May 4, the ten-year (IEF) yield closed at 3% and depreciated by 0.8 basis points. The two-year yield (SHY) closed at 2.50%.

The US goods and services deficit was at $49.0 billion in March, a decrease of $8.8 billion from $57.7 billion in February.

The Bureau of Economic Analysis defines PCE (personal consumption expenditure) as the value of goods and services purchased by, or on behalf of, US residents.