Monthly Archives: June 2015

Market Insights 6/30/2015

Halfway Through the Trading Year, Greek Future Still Unclear

U.S. equities closed the trading session higher as stocks rebounded somewhat from yesterday’s steep declines, which were the largest in about a year, on the heels of a failed compromise between Greece and its creditors.

Q2 concluded with some mixed reads from the economic calendar, while tomorrow Q3 will commence with some key domestic manufacturing reads. Treasuries and gold were lower, while the U.S. dollar and crude oil prices advanced.

The Markets…

The Dow Jones Industrial Average gained 23 points (0.1%) to 17,619

The S&P 500 Index added 5 points (0.3%) to 2,063

The Nasdaq Composite was 28 points (0.6%) higher at 4,987

In moderately heavy volume, 1.1 billion shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq

WTI crude oil increased $1.14 to $59.47 per barrel and wholesale gasoline advanced $0.05 to $2.05 per gallon

The Bloomberg gold spot price declined $7.27 to $1,172.55 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.7% higher at 95.48

Consumer Confidence jumps

The 20-city composite S&P/Case-Shiller Home Price Index showed a gain in home prices of 4.9% y/y in April, below the estimate of a 5.5% increase. M/M, home prices were higher by 0.3% on a seasonally adjusted basis for April, south of forecasts calling for a 0.8% gain.

The Consumer Confidence Index rose to 101.4 in June from a downwardly revised 94.6 in May and compared to the Bloomberg estimate of 97.4. Components pertaining to expectations of business conditions and sentiment toward the present situation both improved solidly. Also, on employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—improved to -4.3 from -6.6 last month.

The Chicago Purchasing Managers Index showed Midwest activity remained in contraction territory (below 50) for the second-straight month and the fourth out of the past five, after rising to 49.4 in June, from 46.2 in May, and versus expectations of an improvement to 50.0.

Treasuries were lower, with the yield on the 2-year note increasing 1 basis point to 0.65% and the yields on the 10-year note and the 30-year bond advancing 3 bps to 2.36% and 3.13%, respectively.

The beginning of 3Q will bring a couple of reads on June U.S. manufacturing activity, with tomorrow’s releases of the ISM Manufacturing Index and the final Markit Manufacturing PMI Index. ISM’s report is projected to show a modest improvement to 53.2 from 52.8 in May, while Markit’s release is expected show an unrevised 53.4 reading, but down from 54.0 in May. Readings above 50 for both indexes denote expansion. As noted, the manufacturing sector appears to still be struggling, potentially hampered by the strong dollar, although the sharp rise has now stabilized. We believe manufacturing will improve in the coming months, helped by a more stable dollar and improving global economic growth, but caution seems likely to continue in businesses and consumers for the foreseeable future.

Other reports on tomorrow’s domestic economic calendar include: MBA mortgage applications, construction spending, vehicle sales and ADP’s employment change report.

Europe lower, Asia rebounds from yesterday’s rout

The European equity markets finished lower, extending yesterday’s sharp broad-based sell-off that came courtesy of Greece’s failure to strike a deal with its creditors over the weekend, while calling for a July 5 referendum and announcing capital controls. Greek markets remained closed, while Athens is expected to miss its payment to the International Monetary Fund (IMF) today and its current bailout program will expire tonight. Reuters reported that European Commission President Jean-Claude Juncker made a last-minute offer to Greece to try to persuade Prime Minister Tsipras to accept a bailout deal before Sunday’s referendum. However, late in the session news broke that eurozone finance ministers will hold a teleconference at 7 p.m. Brussels time to discuss a request by the Greek government for a new two-year bailout deal, though German Chancellor Angela Merkel said there would be no new talks before Greece’s referendum on Sunday. The euro traded lower versus the U.S. dollar and bond yields in the region were mostly lower, though Greek rates continued to surge.

In economic news, German retail sales unexpectedly rose in May, the eurozone unemployment rate held at an elevated 11.1%, and eurozone consumer price inflation was estimated at a 0.2% y/y rise for June, matching forecasts. Also, U.K. 1Q GDP was revised higher to a 0.4% quarter-over-quarter pace of growth, as expected, from the 0.3% increase that was previously reported, though a slower pace than the 0.8% expansion posted in 4Q.

Stocks in Asia recovered some of yesterday’s broad-based sell-off despite heightened concerns about a potential Greek default. Japanese equities finished higher even as the yen continued to strengthen, while stocks in mainland China rallied on hopes that the government may take further action to combat the recent sharp decline. Speculation that the government may suspend IPOs and potentially use the country’s endowment fund to buy equities aided the rebound, on the heels of this weekend’s announcement from the People’s Bank of China (PBoC) that it will cut its benchmark lending and deposit rates by 25 bps and reduce the reserve requirement ratio for certain banks.

Market Insights 6/29/2015 – Greek Disaster

Global Audience Anxiously Awaiting Final Act of Greek Drama

U.S. equities finished sharply lower, mimicking the global trend as broad-based pressure weighed on stocks with headlines again dominated by the fact that Greece and its creditors have yet to reach a compromise.

Treasuries rallied as investors sought assets traditionally considered being less risky, while the domestic economic calendar revealed a rise in pending home sales and some improvement in regional manufacturing activity. The U.S. dollar and crude oil prices were lower, while gold was higher.

The Markets….

The Dow Jones Industrial Average tumbled 350 points (2.0%) to 17,596

The S&P 500 Index lost 44 points (2.1%) to 2,058

The Nasdaq Composite was 122 points (2.4%) lower at 4,958

In moderately heavy volume, 865 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq

WTI crude oil fell $1.30 to $58.33 per barrel, wholesale gasoline lost $0.02 to $2.00 per gallon

The Bloomberg gold spot price gained $3.73 to $1,179.24 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% lower at 94.91

Pending home sales rise for fifth-straight month

Pending home sales rose 0.9% month-over-month in May, the fifth-consecutive monthly gain, versus the projected 1.0% gain, and following the downwardly revised 2.7% increase registered in April. Compared to last year, sales were 8.3% higher last month, versus the 11.8% rise that was anticipated. Pending home sales reflect contract signings and are used as a gauge of the pipeline of existing home sales, which rose in May to the highest rate in nearly six years.

The Dallas Fed Manufacturing Index improved to -7.0 for June from May’s -20.8 level and compared to the forecasted -16.0 figure. A reading below zero denotes contraction.

Treasuries rallied amid heightened global concerns regarding Greece, with the yield on the 2-year note dropping 8 basis points to 0.63%, the yield on the 10-year note tumbling 15 bps to 2.32% and the 30-year bond rate falling 14 bps to 3.10%.

Tomorrow’s economic calendar will provide investors a look at the S&P/Case-Shiller Home Price Index, forecasted to show that home prices within the 20-city composite rose 5.5% year-over-year and 0.8% m/m on a seasonally-adjusted basis during April, and the Chicago Purchasing Manager Index will be reported, expected to move higher to a level of 50.0 for June from the 46.2 posted in May. Rounding out the day will be the Consumer Confidence Index, with economists looking for a reading of 97.4 for June, up from the 95.4 registered in May.

Europe and Asia broadly lower on Greece concerns

The European equity markets sold off broadly on heightened concerns about a potential Greek default and exit from the Eurozone after last minute debt talks with its international creditors broke down over the weekend. In the wake of the failed talks, Greece’s Prime Minister Tsipras called for a July 5 referendum on the reform demands by its creditors, while the nation imposed capital controls, including a 60 euro limit on ATM withdrawals for its citizens.

Greek banks were closed and the stocks markets in the nation are not expected to reopen until July 6.

Exacerbating sentiment, the European Central Bank (ECB) announced that it will cap its emergency funding to the country’s banks at its current level. The euro reversed to the upside in late-day action versus the U.S. dollar and bond yields for peripheral Eurozone nations rallied, with Greek rates surging. However, interest rates in Germany, France and the U.K. traded lower.

Stocks in Asia finished broadly lower to begin the week amid dampened global sentiment as the Greek uneasiness overshadowed further stimulus measures over the weekend by the People’s Bank of China (PBoC). The PBoC lowered its benchmark lending and deposit rates by 25 bps, while also announcing a reduction in the reserve requirement ratio for certain banks. China’s Shanghai Composite Index tumbled in a wild session that saw the index as far down as 7.6% and up 2.5%, posting the largest intra-day point swing since 1992 and registering a more than a 20% drop from its June 12 peak, per Bloomberg. Japanese equities fell amid the global turmoil and some mixed May economic data, with the country’s industrial production falling more than expected, while retail sales rose more than projected.

Market Insights 6/26/2015

Stocks Close Mixed, Greece Lacks Fix

The major U.S. equity indexes closed the trading session mixed as the Dow was supported by an upbeat earnings report from Nike, though sentiment remained hindered by the continued uncertainty of whether Greece will reach a compromise with its international creditors.

Volume was on the heavy side due to some index rebalancing taking place. Treasuries and crude oil prices were lower, while gold and the U.S. dollar were slightly higher.

The Markets…

The Dow Jones Industrial Average increased 57 points (0.5%) to 17,947

The S&P 500 Index lost 1 point to 2,101

The Nasdaq Composite declined 32 points (0.6%) to 5,081

In heavy volume, 1.7 billion shares were traded on the NYSE and 2.8 billion shares changed hands on the Nasdaq

WTI crude decreased $0.07 to $59.63 per barrel, wholesale gasoline added $0.01 to $2.02 per gallon

The Bloomberg gold spot price increased $1.42 to $1,174.59 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 95.40

Markets were lower for the week, as the DJIA declined 0.4%, the S&P 500 Index decreased 0.4%, and the Nasdaq Composite Index descended 0.7%

June consumer sentiment unexpectedly revised higher

The final June University of Michigan Consumer Sentiment Index was surprisingly revised higher to 96.1 from the preliminary level of 94.6, where the Bloomberg forecast called for it to remain. The index was also up from the 90.7 level in May. Components pertaining to current economic conditions and the economic outlook were both revised higher, and both were up versus May. The 1-year inflation projection was unchanged at 2.7%, down from 2.8% in May, while the 5-10 year inflation outlook was revised to 2.6% from 2.7%, and down from 2.8% in the month prior.

Treasuries were lower, with yields rising, as the yield on the 2-year note rose 2 basis points to 0.71%, the yield on the 10-year note gaining 7 bps to 2.47%, and the 30-year bond rate increasing 6 bps to 3.24%.

Europe mixed, Asia mostly lower

The European equity markets finished mixed as European leaders continue to seek a Greek debt deal, with optimism of a possible agreement lingering ahead of Saturday’s meeting of eurozone finance ministers. Greece needs to strike a last-minute deal to unlock further bailout aid, which could help it avoid a default and a potential exit from the eurozone. The euro was lower versus the U.S. dollar, while bond yields in the region were mostly higher. In economic news, French June consumer confidence came in above expectations, German import prices surprisingly declined in May, and Italian consumer and business sentiment reports for this month both topped forecasts.

Stocks in Asia finished mostly lower as conviction remained hamstrung by the lack of a Greek debt deal. Mainland Chinese stocks tumbled amid continued deleveraging of margin traders and liquidity concerns as IPOs flood the market, while sentiment has been exacerbated by valuation warnings by analysts, notably today’s comments from Morgan Stanley. Japanese equities declined as the recent strength in the yen, Greek uncertainty and Chinese sell-off more than offset reports showing Japan’s household spending rose much more than expected and consumer price inflation unexpectedly ticked higher for May. South Korea’s Kospi Index registered its seventh up day in eight sessions, rebounding from the recent pressure stemming from the outbreak of Middle East Respiratory Syndrome (MERS), which prompted this week’s announcement of fiscal stimulus measures from the government.

Weekly Recap: Stocks dip as Greek optimism fades into the week

Stocks appeared set up for a back-to-back weekly gain as Greece delivered new reform proposals over the weekend to its international creditors, which was characterized as a positive step. However, as the week matured, stocks gave up gains as optimism of a Greek debt deal faded with the country’s proposal being rejected by its international creditors, resuscitating concerns about a potential default and exit from the Eurozone. Some upbeat U.S. economic data kept Fed rate hike expectations for this year preserved and continued to foster volatility in the currency and bond markets, with Treasury yields and the U.S. dollar rallying. Last month’s existing and new home sales both came in stronger than expected, hitting multi-year highs, while personal spending in May jumped more than anticipated.

U.S. economic data has improved since the weak first quarter but to a still-subdued pace, allowing the Fed to “normalize” monetary policy at a measured pace, without yet having to react to inflationary pressures. Greece continues to deal with debt deadlines and we don’t know how this will end but the damage to the European economy with a potential default should be relatively minor.

The Week Ahead: June labor report headlines holiday-shortened week

With the U.S. markets scheduled to be closed on Friday, July 3rd, in observance of the Independence Day holiday, next week’s headlining report on the domestic economic calendar, in the form of Thursday’s June non-farm payroll report, will come a day early. Steady job growth has buoyed Fed rate hike expectations and strong employment among young adults has boosted first time home-buyers to help foster optimism that the housing market may become an economic bright spot.

The Fed has characterized the potential coming rate hikes as a “normalization” process, not designed to slow economic growth, but to get monetary policy back to a more “normal” stance. We believe interest-rate sensitive sectors –like utilities and REITs– are at risk of under-performance, as we’ve seen historically and recently. Additionally, we believe tech and financials will continue to outperform, as they have over the past few months as we approach a Fed rate “lift-off.” The labor report will be preceded by Wednesday’s reads on national manufacturing activity from the ISM.

Market Insights 6/25/2015

Stocks Sink, Greece on the Brink

In some relatively choppy trading, U.S. equities registered a negative close as stocks turned red in the afternoon following a reasonably positive morning with the Street weighing another failed attempt for a Greek debt deal and some upbeat domestic economic releases.

Treasuries, gold and crude oil prices were all lower, while the U.S. dollar was nearly unchanged. In equity news, the healthcare sector received a boost on the heels of the U.S. Supreme Court’s announced ruling in regards to the legality of health-insurance subsidies.

The Market…

The Dow Jones Industrial Average declined 76 points (0.4%) to 17,890

The S&P 500 Index lost 6 points (0.3%) to 2,102

The Nasdaq Composite was 10 points (0.2%) lower at 5,112

In moderate volume, 768 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq

WTI crude oil fell $0.54 to $59.70 per barrel, wholesale gasoline lost $0.01 to $2.01 per gallon

The Bloomberg gold spot price declined $2.27 to $1,173.14 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 95.18

Jobless claims and May personal income and spending data relatively upbeat

Weekly initial jobless claims rose by 3,000 to 271,000 last week, below the 273,000 Bloomberg estimate, as the prior week’s figure was revised higher by 1,000 to 268,000. The four-week moving average declined by 3,250 to 273,750, while continuing claims increased by 22,000 to 2,247,000, north of the forecasted 2,218,000 level.

Personal income was 0.5% higher month-over-month (m/m) in May, matching forecasts, while April’s 0.4% rise was revised to a 0.5% gain. Personal spending grew 0.9% m/m in May, versus expectations of a 0.7% increase, while April’s flat reading was adjusted to a 0.1% rise. The May savings rate as a percentage of disposable income declined to 5.1% from the downwardly revised 5.4% posted in April. The PCE Deflator was up 0.3% m/m, in line with forecasts, while the prior month’s flat figure was unadjusted. Compared to last year, the deflator was 0.2% higher, matching expectations. Excluding food and energy, the PCE Core Index was higher by 0.1%, in line with expectations, and the index was 1.2% higher y/y, matching estimates.

The preliminary Markit U.S. Services PMI Index declined to 54.8 in June from 56.2 in May, and compared to the forecasted increase to 56.5, with a reading above 50 denoting expansion.

The Kansas City Fed Manufacturing Activity Index improved to –9 for June from -13 in May, matching expectations, but a reading below zero denotes contraction.

Treasuries were mostly lower, with the yield on the 2-year note nearly unchanged at 0.68%, while the yield on the 10-year note increased 4 basis points (bps) to 2.40% and the 30-year bond rate gained 2 bps to 3.17%.

The lone report due out on tomorrow’s domestic economic calendar will be the final University of Michigan Consumer Sentiment Index for June, which is anticipated to remain at the 94.6 level registered the month prior.

Europe and Asia mostly lower

The European equity markets finished mostly lower amid choppy action as yesterday’s meeting between Greece and eurozone finance ministers failed to yield a debt deal. Stocks spent time on both sides of the unchanged mark as traders grappled with uncertainty regarding a final-minute deal following a two-day summit that began today. The euro traded slightly lower versus the U.S. dollar, while bond yields in the region were mixed. In economic news, German consumer confidence was little changed for July.

Stocks in Asia finished mostly lower as the Greek debt deal impasse remained a drag on conviction, while volatility in mainland Chinese stocks continued. In Japan, strength in the yen exacerbated sentiment. Mainland Chinese stocks remained volatile in the wake of this week’s solid rebound from their tumble into correction territory last week, which came amid liquidity concerns as IPOs flood the market and the nation continues to crack down on margin trading. Reports of a proposed removal of the cap on bank’s loan-to-deposit ratios and the People’s Bank of China liquidity injections were met with data that suggested margin traders reduced their holdings of shares acquired on margin. The South Korean government announced fiscal stimulus measures aimed at offsetting the negative impact from the outbreak of Middle East Respiratory Syndrome (MERS). Finally, India’s S&P BSE Sensex 30 Index posted its ninth gain in ten days on continued easing of food cost inflation concerns and optimism the nation’s central bank may have room to further cut interest rates due to favorable rainfall in the region during the monsoon season. The index hit the highest level since May 22.

Market Insights 6/24/2015

Greek Impasse Continues to Dampen Sentiment

Events in Greece were again in focus during today’s session, as U.S. equities followed their foreign counterparts lower after the troubled nation’s latest reform proposals were rejected by its international creditors, sapping any recent optimism of a potential debt deal.

Meanwhile, domestic 1Q GDP was positively revised, and homebuilder Lennar’s earnings report topped the Street’s quarterly expectations. Treasuries were mostly higher, while gold and crude oil prices, as well as the U.S. dollar, were lower.

The Markets…

The Dow Jones Industrial Average tumbled 178 points (1.0%) to 17,966

The S&P 500 Index declined 15 points (0.7%) to 2,109

The Nasdaq Composite was 38 points (0.1%) lower at 5,122

In moderate volume, 736 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq

WTI crude oil fell $0.74 to $60.27 per barrel, wholesale gasoline lost $0.02 to $2.02 per gallon

The Bloomberg gold spot price declined $4.30 to $1,174.33 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.2% lower to 95.26

1Q GDP revised in line with forecasts

The final look (of three) at 1Q Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter annualized rate of contraction of 0.2%, favorably revised from the 0.7% contraction registered in the second report. This matched the Bloomberg forecast. 4Q GDP expanded by an unrevised 2.2%. Personal consumption was revised to a 2.1% increase, above forecasts calling for a 1.9% gain for 1Q, from the 1.8% increase that was previously reported. Personal consumption grew by an unrevised 4.4% in 4Q. The GDP revision came as the favorable adjustment to personal consumption was met with positive revisions to exports, private inventory and nonresidential investments, and to state and local government spending, partially offset by an upward revision to imports.

On inflation, the GDP Price Index was revised to a flat reading, versus forecasts of an unadjusted 0.1% dip, while the core PCE Index, which excludes food and energy, was unrevised at a 0.8% increase, meeting forecasts.

The MBA Mortgage Application Index rose 1.6% last week, after dropping 5.5% in the previous week. The increase came as a 1.8% rise in the Refinance Index was accompanied by a 1.2% gain for the Purchase Index, while the average 30-year mortgage rate declined 3 basis points (bps) to 4.19%.

Treasuries were mostly higher, as the yield on the 2-year note was flat at 0.68%, while the yields on the 10-year note and the 30-year bond rate declined 4 bps to 2.37% and 3.15%, respectively.

Tomorrow’s domestic docket will be fairly active, beginning with personal income and spending, forecasted to show income rose 0.5% month-over-month (m/m) during May following the 0.4% increase posted in April, while spending is anticipated to have grown 0.7% m/m after being flat the month prior. Weekly initial jobless claims are expected to have risen to a level of 273,000 from the 267,000 the week prior, and the Kansas City Fed Manufacturing Activity Index is forecasted to have improved to a level of -9 for June from the -13 registered in May, with a reading of zero the separation point between expansion and contraction. Markit’s Composite and Services PMI readings will round out the day.

Europe mostly lower as Greek talks continue, Asia higher

The European equity markets traded mostly lower, with Greece’s Prime Minister Tsipras noting that its new reform proposals were rejected by its international creditors. The news dampened sentiment as eurozone finance ministers continue talks today, ahead of a summit of European leaders on Thursday. Greek stocks gave back some of their surge in the past two sessions, while the euro was modestly higher versus the U.S. dollar and bond yields in the region were mixed. A disappointing read on German business confidence may have hamstrung conviction, with the Ifo Business Climate Index declining for a second-straight month to 107.4 in June, from 108.5 in May, and compared to the 108.1 level that was projected. In other economic news, French 1Q GDP was unrevised at a 0.6% q/q pace of expansion, matching expectations, and up from the 0.1% growth posted in 4Q. However, solid gains in oil & gas and basic materials stocks helped U.K. equity markets buck the trend and move modestly higher.

Stocks in Asia finished mostly to the upside amid lingering optimism that Greece can strike a last-minute debt deal, with Japan’s Nikkei 225 Index increasing to the highest close since December 1996. Mainland Chinese stocks continued to see volatility, with the Shanghai Composite Index rebounding from last week’s drop into correction territory on concerns about the flood of IPOs hitting the market and the crackdown in the financial markets on margin trading, while stocks in Hong Kong advanced, extending its winning streak to six sessions, despite reports of more cases of Middle East Respiratory Syndrome (MERS), with healthcare stocks leading the way.

Market Insights 6/23/2015

Greece Is Still the Word

U.S. equities were all over the map in today’s session, finishing with only modest gains, as optimism over a potential final-hour debt deal for Greece ebbed and flowed amid a host of incoming reports and continued protests in the troubled nation.

Plus, Fed rate hike uncertainty resurfaced following some mixed U.S. economic data, highlighted by a seven-year high in new home sales. On the equity front, earnings again dominated the headlines.

Treasuries were lower along with gold, while crude oil prices were higher and the U.S. dollar rallied.

The Markets…

The Dow Jones Industrial Average advanced 25 points (0.1%) to 18,145

The S&P 500 Index gained a point (0.1%) to 2,123

The Nasdaq Composite increased 6 points (0.1%) to 5,160

In moderately light volume, 686 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.63 to $61.01 per barrel, wholesale gasoline rose $0.04 to $2.04 per gallon

The Bloomberg gold spot price declined $14.65 to $1,177.49 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 1.2% higher to 95.46

Seven year high in new home sales headlines domestic economic docket

Durable goods orders fell 1.8% month-over-month (m/m) in May, compared to the Bloomberg estimate of a 1.0% decrease, and April’s 0.5% decline was revised to a 1.5% drop. Ex-transportation, orders rose 0.5% m/m, matching forecasts, but April’s 0.5% increase was negatively revised to a 0.3% decrease. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, increased 0.4%, compared to the projected 0.5% increase, and following the downwardly revised 0.3% decline in the month prior, from an initially reported gain of 1.0%.

New home sales increased 2.2% m/m in May, to an annual rate of 546,000 units—the highest since February 2008—from April’s upwardly revised 534,000 unit pace, and compared to the forecast of a 523,000 rate. The median home price declined 1.0% y/y to $282,800. The supply of new home inventory dipped to 4.5 months at the current sales pace. Sales in the Midwest and South declined m/m, while rising solidly in the West and surging in the Northeast. New home sales are considered a timely indicator of conditions in the housing market as they are based on contract signings instead of closings.

Is Housing Staging a Turn for the Better?, household formations and job growth among 25-34 age bracket are both surging, suggesting another boost for additional home construction and the economy more broadly. Yesterday’s existing home sales report, which showed the largest portion of the housing market posted the highest rate in nearly six years, also highlighted first time home buyers and the strong job gains among young adults.

The preliminary Markit U.S. Manufacturing PMI Index for June declined to 53.4 from May’s 54.0 level, and compared to the expected 54.1 figure, with a reading above 50 denoting expansion.

The Richmond Fed Manufacturing Activity Index improved to 6 in June from 1 in May, versus expectations of an improvement to 4, with a reading above zero denoting expansion.

Treasuries finished mostly lower, as the yield on the 2-year note was flat at 0.67%, while the yields on the 10-year note, along with the 30-year bond, moved 3 basis points higher to 2.41% and 3.20%, respectively.

Tomorrow’s economic calendar will be headlined by the final look (of three) at 1Q Gross Domestic Product (GDP), with economists forecasting that domestic output was revised to a quarter-over-quarter contraction of 0.2% from the initially reported 0.7% decline and personal consumption inched higher to a gain of 1.9% from the originally reported 1.8% increase, while the GDP Price Index and the core PCE index are estimated to remain at their respective levels. Rounding out the day will be MBA Mortgage Applications.

Europe and Asia higher following upbeat data and as Greek optimism lingers

The European equity markets finished broadly higher, extending yesterday’s rally amid growing optimism that Greece can strike a last minute debt deal with its international creditors to unlock further bailout aid and potentially avoid a default and possible eurozone exit. Greece delivered new reform plans ahead of yesterday’s emergency summit that appeared to be received relatively positive by its international creditors.

Another round of talks is set for Wednesday, while European Commission President Juncker suggested that he believes some sort of an agreement can be reached this week, per CNBC. Greek stocks surged for a second-straight session. Also, some upbeat data in the region bolstered sentiment, as the preliminary Markit Eurozone Composite PMI Index—a gauge of business activity in both the services and manufacturing sectors—rose to the highest level in more than four years. The index improved to 54.1 in June, from 53.6 in May and compared to the estimated dip to 53.5, with a reading above 50 denoting expansion. The euro traded decisively lower versus the U.S. dollar, while bond yields in the region were lower, with rates in Greece continuing to tumble.

Stocks in Asia finished higher amid continued optimism that a Greek debt deal may be reached sometime this week, overshadowing some lackluster June manufacturing reports out of Japan and China. A preliminary report from Markit on Japan’s manufacturing activity suggested contraction in the sector for the second time in three months. Meanwhile, HSBC’s preliminary China Manufacturing PMI Index improved to 49.6 from 49.2 in May, and compared to the 49.4 level that economists had projected. Although the index improved more than expected, it remained at a level depicting contraction (below 50) for the fourth-straight month.

Market Insights 6/22/2015

Global Equities Rally on Greek Prospects

U.S. equities staged a solid advance, tracing the global trend that ensued on renewed optimism of a potential deal between Greece and its international creditors. Treasuries were lower as the domestic economic calendar showed that existing home sales rose to the highest rate in nearly six years. The U.S. dollar and crude oil prices gained ground, while gold was lower.

The Markets….

The Dow Jones Industrial Average advanced 104 points (0.6%) to 18,120

The S&P 500 Index gained 13 points (0.6%) to 2,123, sectors leading the charge higher included Financials +1.54%, Energy +1.25% and Technology +.80%. The love sector in the red was Utilities giving back .14%.

Small and MidCaps lagged the LargeCaps but still performed well, with the MidCap 400 higher by .46% and the SmallCap 600 higher by .50%.

The Nasdaq Composite increased 37 points (0.7%) to 5,154

In moderately light volume, 695 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.41 to $60.38 per barrel, wholesale gasoline lost $0.03 to $2.03 per gallon

The Bloomberg gold spot price was $14.65 lower at $1,185.61 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 94.37

May existing home sales rise more than expected

Existing-home sales in May topped expectations, rising 5.1% month-over-month to a 5.35 million annual rate, 9.2% above the pace a year ago and the highest rate in nearly six years, compared to the Bloomberg forecast of a rise to a 5.26 million pace. April’s figure was adjusted upward to a 5.09 million unit rate, while the median existing-home price was up 7.9% from a year ago at $228,700. Single-family sales grew 5.6% m/m and were 9.7% higher y/y, while sales rose in all regions, led by a jump in the Northeast. The share of first time buyers rose to 32%, the highest since September 2012. The National Association of Realtors (NAR) noted the return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down-payment programs.

Today’s report kicked off a heavy economic week, with tomorrow’s new home sales report completing the May housing sales picture, while the durable goods orders report and Markit’s preliminary June Manufacturing PMI Index will offer insight into demand and business activity in the sector. As noted, U.S. economic activity has rebounded a bit in the second quarter and we expect that to continue, with the job market continuing to be a highlight and the housing market showing signs of strength again.

Rounding out tomorrow’s economic calendar will be the Richmond Fed Manufacturing Index, expected to have improved to a level of 4 in June from the 1 registered in May, with a reading above zero indicating expansion in activity for the Mid-Atlantic region.

Treasuries were solidly lower, with the yield on the 2-year note rising 4 basis points to 0.66%, while the yields on the 10-year note and the 30-year bond rallied 12 bps to 2.37% and 3.17%, respectively.

Europe and Asia higher on optimism toward a Greek deal

The European equity markets rallied broadly, led by a surge in Greek stocks. An emergency summit between Greece and its international creditors began today, spurring optimism that the meeting may yield some progress in striking a deal to unlock further bailout aid to help the nation potentially avoid a default and a possible exit from the eurozone. Greece’s Prime Minister Tsipras reportedly presented new reform plans ahead of the emergency summit. The Dutch Finance Minister, who chairs meetings of his euro-area counterparts, embraced the proposals from Athens as a positive step, though he noted they were delivered too late for a thorough appraisal. The euro traded modestly higher versus the U.S. dollar, while bond yields in the region were mixed, with peripheral eurozone rates declining and Greek bond yields tumbling. The economic calendar was light today, though tomorrow we will get key reads on eurozone business activity in the services and manufacturing sectors from Markit.

Stocks in Asia finished higher amid the rise in global sentiment that resulted from the resurfaced hopes of a Greek debt deal, while volume was lighter than usual as mainland Chinese markets were closed for a holiday. The broad-based gains in the region come ahead of key economic reports this week, headlined by tonight’s preliminary June manufacturing reports out of Japan and China.

Greece backs off on pensions in bailout proposal

The Greek government’s latest plan for breaking an impasse on desperately needed bailout aid makes a potentially major concession on cutting deficits in its pension system, three officials familiar with the plan said Monday, though Eurozone leaders warned an immediate breakthrough was unlikely.

The proposals, formally submitted to creditors Monday morning, foresee new pension savings and revenues worth 0.4% of gross domestic product for this year and 1% starting next year, the officials said. That would bring the left-wing government in Athens close to the target demanded by its creditors.

If the government’s calculations are confirmed by Greece’s creditors — the International Monetary Fund, the European Central Bank and eurozone governments — it could be a big step toward ending a four-month deadlock that has prompted warnings of a Greek exit from the eurozone.

“We have made progress over the last few days, but we are not yet there,” said Jean-Claude Juncker, the president of the European Commission, as he was receiving Tsipras ahead of an emergency summit of eurozone leaders.

Technical experts from Greece and the creditors were going over Greece’s latest proposals Monday morning, ahead of meetings of the eurozone’s finance ministers and leaders later in the day. Several finance ministers said Greece’s proposal for a deal arrived too late for eurozone officials to analyze it in any detail.

In Market News….

U.S. stocks opened higher on Monday, sending the Nasdaq Composite to a record. Bullish sentiment appears to be tied to hopes that Greece and its lenders will reach a deal to avert a default. The Nasdaq Composite COMP, moved 34 points higher, or 0.7% to 5,151, the highest level ever. The S&P 500, opened 12 points, or 0.6%, higher at 2,122. The Dow Jones Industrial Average DJIA, jumped 113 points, or 0.6%, to 18,129 at the open.

Market Insights 6/19/2015

Stocks Close Near Session Lows

U.S. equities closed lower amid a blank domestic economic calendar and lack of a solution to the current negotiations involving Greece and its creditors.

The trading session exhibited some heavy volume and an increase in volatility, likely the product of quadruple witching, the simultaneous expiration of stock index futures and options, stock options and single stock futures.

Treasuries were higher and the U.S. dollar was flat, while gold and crude oil prices were lower.

The Markets…

The Dow Jones Industrial Average declined 102 points (0.6%) to 18,014

The S&P 500 Index fell 11 points (0.5%) to 2,110, all 10 S&P sectors finished lower by the close with Fianncials -1.67% giving back the most and HealthCare -.08% the least.

Small and Midcaps fared batter than their LargeCap cousins with the SmallCap 600 higher by .10% by days end and the MidCap 400 gave back .22% by days end.

The Nasdaq Composite lost 16 points (0.3%) to 5,117

In heavy volume, 1.8 billion shares were traded on the NYSE and 2.3 billion shares changed hands on the Nasdaq

WTI crude decreased $0.84 to $59.61 per barrel, wholesale gasoline declined $0.05 to $2.06 per gallon

The Bloomberg gold spot price decreased $1.10 to $1,200.83 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 94.12

Markets were higher for the week, as the DJIA gained 0.7%, the S&P 500 Index increased 0.7%, and the Nasdaq Composite Index advanced 1.3%

Treasuries gaining ground, while U.S. economic front quiet today

Treasuries were higher, while the U.S. economic calendar was void of major releases today. The yield on the 2-year note declined 2 basis points to 0.62% and the yields on the 10-year note and the 30-year bond fell 7 bps to 2.26% and 3.06%, respectively.

This week’s domestic economic front fostered solid gains for stocks, with the Nasdaq registering record highs, as the Federal Open Market Committee (FOMC) held steady on monetary policy, while suggesting that the pace of eventual rate hikes were likely to be slow. The Fed’s assessment of the economy has improved since the last meeting, while the telegraphed slow pace of rate hikes coming has better historical implications for stocks than fast-paced cycles.

Also, the Consumer Price Index showed that inflation remained tame to keep the pressure on the Fed to begin raising rates in check, while housing data continued to show signs of strength, with homebuilder sentiment jumping to the highest level since September and building permits posting the strongest pace in almost eight years. Stocks gained ground despite continued volatility in the bond, currency and commodities markets, as well as festering Greek debt deal uncertainty.

Europe and Asia mostly higher

The European equity markets finished mostly higher, with the string of gains in the U.S. on some upbeat economic data and eased Fed rate hike concerns helping buoy global sentiment. Traders appeared to shrug off the lack of a Greek debt deal following yesterday’s Eurozone finance minsters’ meeting, with an emergency meeting set for Monday likely keeping hopes of a final hour deal alive for Greece to unlock further bailout aid, potentially avoiding a default and an exit from the Eurozone. Additionally, reports that the European Central Bank increased the level of emergency funding for Greek banks could have helped keep the Greek concerns at bay. The Euro lost modest ground versus the U.S. dollar and bond yields in the region were mostly lower. In economic news, German producer price inflation came in unexpectedly flat month-over-month in May, versus expectations of a 0.2% gain and April’s 0.1% increase, while U.K. public sector net borrowing came in below forecasts for last month.

Stocks in Asia finished mostly higher on the heels of the solid gains in the U.S. yesterday as some favorable economic reports complemented Wednesday’s Fed policy decision, which suggested the pace of rate hikes will be data dependent once they begin. Stocks in the region shrugged off the continued Greek debt deal impasse. The Japanese yen held steady after the Bank of Japan (BoJ) expectedly left its monetary policy stance unchanged, with BoJ Governor Kuroda reaffirming that inflation remains on track to meet its target. Resource-related stocks led a broad-based advance in Australia, while equities in India rose on continued optimism that above average rainfall so far in the monsoon season could keep food costs contained and leave the door open for further rate cuts. South Korea’s Kospi Index finished higher for a third-straight session, with financials showing some strength and airlines rebounding from pressure stemming from the recent outbreak of Middle East Respiratory Syndrome (MERS). Stocks in mainland China bucked the regional trend with the Shanghai Composite Index tumbling 6.4%, posting its worst week since the global financial crisis in 2008, per Bloomberg, and entering correction territory. The Shanghai dropped more than 13.0% this week to pare its sharp rally that began the year, amid liquidity concerns as a flood of IPOs are hitting the market and lingering uneasiness as the nation continues to crack down on margin trading.

The Week Ahead: Host of data set for next week

Next week, the U.S. economic calendar will heat up, with May existing and new home sales reports providing a look at housing activity, Markit’s preliminary June Manufacturing and Services PMI Indexes offering a glimpse at business activity, durable goods orders delivering a read on manufacturing demand, and the final revision of 1Q GDP giving us closure on the sluggish start to the year. As noted previouslly, U.S. economic activity has rebounded a bit in the second quarter and we expect that to continue, with the job market continuing to be a highlight and the housing market showing signs of strength again.

Other domestic reports slated for next week include: personal income and spending, regional manufacturing reports out of Richmond and Kansas City, weekly MBA mortgage applications and jobless claims, and the final University of Michigan Consumer Sentiment Index.

Internationally: Europe—eurozone consumer confidence, Markit’s eurozone business activity reports, French 1Q GDP, and German business confidence. China—Markit’s preliminary Manufacturing PMI Index. Japan—consumer price inflation, household spending, Markit’s preliminary Manufacturing PMI Index, and small business confidence.

Market Insights 6/18/2015

Bull Rush

U.S. equities closed the trading session with solid gains following some favorable economic data, which may be adding weight to the argument for an increase in the target federal funds rate in the second half of the year from the self-characterized data dependent Federal Reserve. Treasuries were mixed and the U.S. dollar was lower, while gold and crude oil prices advanced. Equity news was led by a mixed bag of corporate earnings reports.

The Markets….

The Dow Jones Industrial Average surged 180 points (1.0%) to 18,116

The S&P 500 Index gained 21 points (1.0%) to 2,121, 9 of the 10 S&P 500 sectors finished higher with Energy the only loser giving back.06%. Leading the upside surge were HealthCare +1.14%, Utilities +1.32% and Consumer Discretionary +1.21%.

The Nasdaq Composite increased 68 points (1.3%) to 5,133

In moderate volume, 845 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.53 to $60.45 per barrel, wholesale gasoline added $0.01 to $2.11 per gallon

The Bloomberg gold spot price was $16.30 higher at $1,201.85 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% lower at 94.01

Jobless claims fall more than expected, while consumer price inflation lower than forecasted

Weekly initial jobless claims fell by 12,000 to 267,000 last week, below the 277,000 Bloomberg estimate, as the prior week’s figure was unrevised at 279,000. The four-week moving average decreased by 2,000 to 276,750, while continuing claims dropped by 50,000 to 2,222,000, north of the forecasted 2,210,000 level.

The Consumer Price Index (CPI) was up 0.4% month-over-month in May, south of the forecast of a 0.5% increase, while April’s 0.1% gain was unrevised. The core rate, which strips out food and energy, increased 0.1% m/m, compared to expectations of a 0.2% gain and April’s unrevised 0.3% rise. Y/Y, prices were flat for the headline rate, versus forecasts of a 0.1% increase, while the core rate was 1.7% higher, compared to expectations of a 1.8% rise. April’s y/y figures showed an unrevised 0.2% dip and an unadjusted 1.8% rise for the headline and core rates respectively.

The Conference Board’s Index of Leading Economic Indicators (LEI) rose 0.7% m/m for the second-straight month in May, well above the projected 0.4% growth, with components pertaining to the yield curve and building permits continuing to buoy the index.

Treasuries are mostly lower in afternoon action, with the yield on the 2-year note nearly unchanged at 0.65%, while the yields on the 10-year note and the 30-year bond are increasing 6 bps to 2.37% and 3.15%, respectively.

Bond yields finished mixed and the U.S. dollar moved lower on the heels of yesterday’s Federal Reserve monetary policy decision, while the Fed kept rates unchanged, while publishing new (…and generally lower…) forecasts for the expected path of rate hikes. The Fed’s assessment of the economy has improved since the last meeting, while the telegraphed slow pace of rate hikes coming has better historical implications for stocks than fast-paced cycles. We remain cautiously bullish and see the markets moving higher throughout the year with increased volatility.

Europe mostly higher despite lingering Greek uncertainty, Asia mixed

The European equity markets finished mostly higher, overcoming early losses on the heels of the upbeat U.S. economic data, though Greek debt deal uncertainty amid today’s key meeting among eurozone finance ministers continued to be in focus. The U.S. data followed yesterday’s Fed monetary policy decision that appeared to ease concerns about the pace of eventual rate hikes. The eurozone finance ministers’ meeting is being characterized as Greece’s last chance to strike a deal to unlock further bailout aid and avoid a default and a potential exit from the eurozone. The euro traded to the upside versus the U.S. dollar and bond yields in the region were mostly lower. The euro found some support from continued weakness in the U.S. dollar on the heels of the Fed’s policy decision. In economic news, the Swiss National Bank (SNB) left its monetary policy unchanged, as expected, while the nation reported a wider-than-expected May trade surplus. Swiss stocks saw downside pressure after the SNB urged the country’s largest banks to continue to improve their capital positions. Finally, U.K. retail sales came in stronger than anticipated.

Stocks in Asia finished mixed with traders digesting yesterday’s Fed policy decision ahead of the Bank of Japan’s (BoJ) monetary policy decision tomorrow. Also, Greek debt deal uncertainty continued to foster attention ahead of the summit in the eurozone. Weakness in the U.S. dollar yesterday on the Fed’s policy statement boosted the Japanese yen, which weighed on export-related stocks in the region, ahead of the BoJ’s decision. Chinese stocks tumbled, extending large weekly declines, and sentiment in Hong Kong was hamstrung by a flood of IPOs hitting the market, overshadowing a relatively upbeat read on the nation’s housing prices. In other economic news, China’s foreign direct investment rose at a smaller pace that expected for May.