Market Digest – Week Ending 6/27
Stocks took a breather this week. US markets were relatively flat amidst turmoil in Iraq and fears of rising rates, while disappointing economic and confidence data from Europe drove foreign markets slightly lower. Oil prices also fell as production levels in Iraq appeared stable, despite the recent conflict. US Treasuries and gold both increased.
S&P 500: 1,961 (-0.1%)
FTSE All-World ex-US: (-0.4%)
US 10 Year Treasury Yield: 2.53% (-0.08%)
Gold: $1,316 (+0.2%)
USD/EUR: $1.365 (+0.4%)
- Monday – BNP Paribas agreed with US prosecutors to a potential settlement of $8 to $9 billion for violating US sanctions against transacting with Sudan.
- Tuesday – US Secretary of State John Kerry met with Kurdish leaders, urging them to cooperate in forming a new government in Iraq.
- Wednesday – A revised estimate showed the US economy shrank 2.9% in the first quarter, much more than expected.
- Thursday – St. Louis Fed president James Bullard suggested interest rates might increase sooner than expected.
- Thursday – Helped by Portugal’s 2 – 1 victory over Ghana, the US men’s team advanced to the World Cup’s Round of 16 after losing to Germany 1 – 0.
- Friday – The EU signed pacts with Ukraine, Georgia, and Moldova to lower trade barriers and promote political reform.
This week had an oddly dour feel to it. But in reality, US markets were only modestly down from last Friday. In fact, there were a number of positives worth mentioning. Hopefully they can set a more optimistic tone before diving into your weekend.
The US housing market has had a bumpy ride over the last year, but two reports this week pointed to a possible recovery. On Monday, existing home sales increased more than expected, rising 4.9% from the previous month. And on Tuesday, new home sales jumped 18.6%, coinciding with a 4.6% increase in prices. Both are welcome data points, as the US housing sector can be a major driver of economic growth. But it’s too early to call it a trend. After a cold winter, there was likely some pent up demand. More importantly, the supply of new homes fell substantially, which will act as a headwind to future growth.
On Thursday, the US men’s team put forth a solid effort against top-ranked Germany in its final game of the 2014 World Cup Group Round. Even though the end result was a loss, they held Germany to one goal. This, coupled with Portugal’s 2 – 1 victory over Ghana, propelled the US team into the tournament’s next phase: the Round of 16. It was at this point four years ago they were knocked out by Ghana in South Africa. Let us hope we fair better against Belgium, which is set to take place on Tuesday. Regardless of the result, World Cup fever has gripped the nation. USA! USA!
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