Succinct summations of the week’s events:
Positives:
1. The world takes a deep breath after UK vote.
2.Private sector wages & salaries saw a 0.2% m/o/m and 4.9% y/o/y gains.
3. US personal spending in May grew by .4% m/o/m; April was revised up to a 1.1% rise from 1% initially. Q2 GDP estimates rose in response.
4. Applications to refi a home jumped 63% y/o/y as mortgage rates dropped 50 bps to 3.75% vs last year.
5. PCE inflation deflator rose .2% both headline and core, in line. Headline inflation was up .9% from 1.1% in April
6.ISM June manufacturing index rose to 53.2 from 51.3 in May.
7. Case/Shiller home price index of prices for April was up 5.44% y/o/y. U.S> Housing has been rising between 4.5 – 5.5% for 2 years now on lower mortgage rates.
8.Unemployment rate in the Eurozone fell one tenth to 10.1% in May which is near a 5 year low but still remains well above the pre recession low of 7.2% in early ’08
9. June Conference Board consumer confidence index rose to 98 from 92.4, 4.5 pts above estimates, and best since October.
Negatives:
1. UK politics in disarray, as is potential losses for UK businesses. The word Uncertainty is overused, but it seems appropriate here.
2. European and Japanese banks, already wrestling with negative interest rates, now must contend with possible shifts out of their branches in London, the soon to be ex-finance capital of Europe. Their loss will be Edinburgh
3. Initial jobless claims rose 10k w/o/w to 268k, in line with the estimate of 267k. 4 week average was unchanged at 267k
4. Pending home sales fell 3.7% m/o/m in May off the best level in 10 years; April was revised down to a gain of 3.9% from the 5.1% initially printed. All four regions of the country saw sales declines
5. Mortgage applications to buy a home fell 3% to the lowest level in a month but still remains up about 13% y/o/y.
6. Personal income in May rose .2% m/o/m. one tenth less than expected; April was revised up by one tenth.
