The ISM Manufacturing Index is anticipated to rise to 55.4 in the upcoming report for July, reflecting a slight improvement over the previous month, according to The Capital Spectator’s median econometric point forecast.
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The update on US personal consumption spending for June is expected to show a 0.3% increase compared to the previous month, according to The Capital Spectator’s median econometric point forecast. This is slightly higher than the reported 0.2% rise for May.
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Private nonfarm payrolls in the US are projected to rise by 232,000 (seasonally adjusted) in the July update from the Labor Department, based on The Capital Spectator’s median econometric point forecast. This predicted increase is notably less than the previously reported rise of 262,000 for June.
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The ADP Employment Report released today indicates an increase of 218,000 private sector payrolls in July. Although this figure fell short of most expectations and is lower than June’s surge of 281,000, it represents a fourth consecutive month of over 200,000 gains. Some analysts may focus on the slowdown in the monthly growth rate, but it is essential to note that the year-over-year change in ADP job data has risen to a 2.15% increase, the fastest year-over-year pace since August 2012. This suggests that the overall trend for payrolls continues to show moderate growth with a slight upward bias in the latest numbers.
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In an unexpected turn, interest rates fell even as the market anticipates higher rates. The 10-year Treasury yield dropped below 2.47%, nearing its lowest level since a decline in late May when it hit approximately 2.40% at one point. Several factors are being discussed regarding this decline in borrowing costs: heightened fears surrounding the Russia-Ukraine crisis, concerns over the fragile recovery in the Eurozone, and issues in the US housing sector that could impact the broader economy in the future. Regardless of the reasoning, there seems to be a renewed appetite for bonds.
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Tomorrow’s ADP Employment Report is predicted to indicate a 271,000 increase (seasonally adjusted) in private nonfarm payrolls for July, slightly lower than the previously reported increase for June, according to The Capital Spectator’s median econometric point forecast.
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The US economy is poised for a substantial rebound in the government’s forthcoming initial estimate of second-quarter GDP, set to be released on Wednesday. Following the unexpectedly sharp 2.9% decline in Q1 GDP (real seasonally adjusted annual rate), the US Bureau of Economic Analysis (BEA) is projected to report a 3.2% increase in its advance Q2 estimate on July 30. This current projection is slightly below last month’s forecast, which anticipated a 3.3% rise.
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● Asset Rotation: The Demise of Modern Portfolio Theory and the Birth of an Investment Renaissance
By Matthew P. Erickson
Summary via publisher, Wiley
In Asset Rotation, portfolio management pioneer Matthew P. Erickson introduces a proven method for asset management that has consistently worked through varying market conditions. This approach allows investors to capitalize on rising markets while also maintaining a discipline to reduce exposure during prolonged downturns. Consequently, this strategy has historically yielded superior returns with significantly lower risk, fostering true long-term sustainable growth. The investment landscape is evolving, and traditional strategies may no longer suffice. Bonds, once considered a safe investment, now pose risks as interest rates rise from record lows. For those adhering to conventional Modern Portfolio Theory, what was once deemed secure may now become a major liability.
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The housing market continues to show signs of weakness, as highlighted by yesterday’s report of a surprising decline in new home sales for June. This follows last week’s information on new residential construction, which also dropped more than anticipated. On a more positive note, existing home sales, which dominate residential transactions, saw an unexpected increase for June. However, the overall picture for housing appears mixed at best. Given this sector’s significant connection to the business cycle, it is reasonable to conclude that housing poses a leading risk factor at this time.
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Could this be a pivotal moment? A turning point where the economy truly begins to improve? It’s possible. This may explain the stock market’s rally this year, as it anticipates more positive economic news. Today’s weekly update on new unemployment benefit claims shows initial jobless claims unexpectedly dropping to 284,000 on a seasonally adjusted basis for the week ending July 19. This marks the lowest level since February 2006 and indicates that the recent moderate gains in private payrolls are set to continue, if not accelerate.
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The economic landscape in the US is currently undergoing notable shifts, with key indicators pointing toward potential growth. As we look ahead, various reports are set to shed light on the strength of consumer spending, employment levels, and manufacturing sectors, each offering insights into the overall health of the economy.
In conclusion, the upcoming economic updates will be crucial for understanding trends and patterns that could impact financial markets and overall economic stability. Keeping a close eye on these developments will be essential for forecasting the trajectory of the US economy moving forward.
