Major stock indices ended the week mixed. The biggest gains were in developed international and emerging markets while the small cap Russell 2000 ended slightly lower.
The PCE price indices for August came in closer to the FED’s target.
China has struggled with excess property inventories for years and is also seeing slower growth. China unleashed major stimulus moves including:
- Reducing a key interest rate from 1.7% to 1.5%.
- Reducing banks’ reserve requirements for large banks only from 7.0% to 6.6%.
- Reducing the down payment ratio for a second home from 25% to 15%, although the mortgage rates for purchasing second homes will remain much higher than first homes.
- Outstanding mortgage rates will be reduced by 0.5%.
- The central bank will provide 100% of the principal for loans by state owned firms buying unsold property.
Treasury bond yields rose with the 30-year bond yield at 4.106% and the 10-Year note at 3.754%. Freddie Mac reported that the average 30-year mortgage rate fell to 6.08%. Crude oil fell to $68.64 a barrel and natural gas rose to $2.921 per MMBTUs. The U.S. dollar index fell to 100.42 and gold rose to $2680.90 an ounce.
In economic reports this week:
- The S&P Global Home price index showed home prices nationally rose a seasonally adjusted 0.2% in the month of July.
- From July 2023 home prices have risen 5.0%, down from a 5.5% gain in June.
- The Commerce Department reported:
- New home sales fell a seasonally adjusted 4.7% in the month of August but were up 9.8% from last August.
- The median sales price of a new home was $420,600 a 2.1% decline from July.
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- Personal consumption expenditures rose 0.2% in August and 0.1% adjusted for inflation.
- Personal incomes rose 0.2%.
- The PCE price index rose 0.1% and excluding volatile food and energy rose 0.1%.
- From a year earlier PCE prices rose 2.2%, down from 2.5% year over year in July.
- Excluding volatile food and energy core prices rose 2.7% from last August.
- Personal consumption expenditures rose 0.2% in August and 0.1% adjusted for inflation.
- The Labor department reported:
- Seasonally adjusted first-time claims for unemployment were 218,000, a decrease of 4,000 from the previous week’s revised level.
- The 4-week moving average of claims, designed to smooth out volatility, was 224,750, a decrease of 3500 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Seasonally adjusted first-time claims for unemployment were 218,000, a decrease of 4,000 from the previous week’s revised level.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 13.2MM BPD.
- Natural gas storage rose 47BN cubic feet and is above the average level during the past five years at this time of year.
- Baker Hughes reported the number of oil rigs fell 4 to 484 and the number of natural gas rigs rose 3 to 99.
Please call us if you have any questions.
Loren Rex – Emeritus
Erik A Smith, AIF® – President & C.E.O.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
https://www.census.gov/economic-indicators
https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024
