The housing sector is poised to see a rise in construction activity, with July’s housing starts projected to reach 882,000 according to The Capital Spectator’s average econometric forecast (seasonally adjusted annual rate). This figure indicates a moderate increase from the June tally of 836,000. However, this anticipated growth is slightly less than what many economists predicted based on various consensus forecasts.
The yield on the benchmark 10-year Treasury Note is currently at a one-year high, signaling a gradual shift towards higher interest rates. While the increase is not alarming, it serves as a reminder that the anticipated trend of rising interest rates could be beginning. Although all standard caveats remain in place, it appears we may have seen the nadir of interest rates, marking the onset of a new economic phase.
The industrial production report for July is expected to show a modest gain of 0.2% from the previous month, based on The Capital Spectator’s average econometric forecast. This anticipated increase is slightly below the earlier reported rise of 0.3% for June. Furthermore, the forecast for July lies toward the lower end of anticipated increases derived from surveys conducted among economists.
Retail sales in the US experienced a 0.2% increase in July, meeting expectations yet falling short of some forecasts. This modest growth is a slowdown compared to June’s 0.6% climb. However, it’s worth noting that retail spending has risen for four consecutive months through July. In fact, except for March, there has been a consistent monthly rise in retail sales throughout the year.
The concept of peak oil has encountered another challenge as global crude oil production hit a record high in April 2013, according to the latest figures from the US Energy Information Administration (EIA). Production reached 76.348 million barrels per day, surpassing the previous peak of 76.036 million barrels per day recorded in December 2012. This continuous increase in oil supply is being substantiated by recent data.
In recent years, many financial analysts have noted significant changes in capital markets, particularly in the stock sector. The introduction of numerous new players, including hedge funds, algorithmic trading firms, and various short-term-focused quantitative trading shops, has redefined the landscape. The pace of trading has intensified, sometimes occurring in fractions of a second. This evolution has resulted in an increased prevalence of short- and medium-term price momentum.
The upcoming US retail sales report for July is anticipated to reveal a 0.2% increase, based on The Capital Spectator’s average econometric forecast. This is below the previously reported 0.4% gain for June. Furthermore, the forecast for July falls on the lower end compared to consensus expectations drawn from recent economist surveys.
● Fixed Income Relative Value Analysis: A Practitioners Guide to the Theory, Tools, and Trades
By Doug Huggins and Christian Schaller
Summary via publisher, Bloomberg/Wiley
As western governments issue increasing amounts of debt, the fixed income markets have never been more important. Yet the methods for analyzing these markets have failed to keep pace with recent developments, particularly the decline in credit quality of many sovereign issuers. In Fixed Income Relative Value Analysis, authors Doug Huggins and Christian Schaller address this gap by providing analytical tools for assessing value in markets related to government bonds, interest rate swaps, and associated futures and options. The book adopts a practitioner’s perspective, linking market analysis theory with actionable trading strategies, supported by numerous real-world examples.
Recent economic data from China indicates a stabilizing trend for the world’s second-largest economy. According to Reuters report, “factory output rose 9.7 percent in July from a year earlier, marking the most robust growth since it increased by 9.9 percent in January and February, according to data from the National Bureau of Statistics.” This development raises questions about whether the prevalent narrative regarding a “Great Deceleration” in emerging markets is premature, timely, or already outdated.
New unemployment benefits claims slightly increased last week, dissipating the five-and-a-half-year low reported previously due to a minor upward revision. The claims for the week ending July 27 matched the previous low established during the week of May 4, 2013. Nevertheless, the key takeaway remains encouraging: claims are still trending downward, signaling a positive outlook for the labor market and overall economy.
The recent economic indicators reflect a mixed but cautiously optimistic landscape for various sectors. The anticipated increases in housing starts and retail sales show signs of resilience, while the stabilization of industrial production and unemployment claims suggest positive trends in the labor market. As these elements evolve, they offer valuable insights for investors and policymakers navigating a dynamic economic environment.
