Stocks finished the week mixed as investors digest earnings reports resulting in major indices finishing the week virtually flat. Interest rates moved higher with the 10-year treasury yield reaching 2.89%, 6 basis points higher than the week prior. The spread between the 10-year treasury yield and the 2-year treasury yield widened by 3 basis points, yet still is at a very narrow margin of 0.28%. Commodity prices ended the week slightly lower with the price of gold dropping 0.87% to $1,230.70 an ounce and crude oil dropping 0.37% to $70.31 a barrel. The U.S. dollar index reached as high as 95.59 during the week but finished at 94.44 after Trump accused China and the EU of manipulating their currencies.
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THIS WEEK’S HIGHLIGHTS
- Retail sales in the U.S. rose a solid 0.5% in June, boosted by strong gains in the categories of autos and restaurants. Additionally, a significant upward revision in retail sales data from the previous month’s report showed a rise of 1.3% as opposed to the previously reported 0.8%.
- Industrial production increased by 0.6% in June after coming off a 0.1% decline the month prior. Much of the increase was driven by a 0.8% rise in manufacturing output and 1.2% rise in mining output.
- Housing starts took an unexpected downturn in June, dropping 12.3% to an annualized rate of 1.17 million. Housing permits also dropped but by a less substantial 2.2% to an annualized rate of 1.27 million. However, housing data can be very volatile as last month’s housing starts year-over-year change was up 20.3% and this months it was down 4.2%.
- Initial unemployment claims dropped by a significant 8,000 for the week ending July 14th to a total of 207,000. This marks the lowest level it has been since December of 1969. The less volatile 4-week average of initial unemployment claims dropped by 2,500 to 220,500. Meanwhile continuing unemployment claims rose by 8,000, bringing the 4-week average up 6,000 to 1.74 million.
- The Philadelphia Fed’s general business conditions index rose more than expected in July to 25.7 from last month’s reading of 19.9. A sharp rise in prices paid was the main driver in leading the headline index higher. A significant rise in input costs also drove the index higher as tariffs begin to take effect.
Federal Reserve Chairman Jerome Powell said they will continue to gradually raise interest rates “for now” to keep inflation near target.
QUOTE OF THE WEEK
“Greed is normally balanced by fear.”
– Peter Schiff
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