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The Weekly Bottom Line

by Sergio Mariaca on Oct 7, 2019 10:42:09 AM |Share:

Here is what happened in the Capital Markets this week.

The Weekly Bottom Line (please click link to open)

The Weekly Bottom Line, courtesy of TD Economics, includes a review of market performances, recent key economic indicators, a calendar of upcoming key economic releases, and other relevant data. The highlights from this week’s report include: 

  • October began on a sour note. A deepening contraction in the manufacturing ISM confirmed that the global manufacturing slump has washed up on American shores, and the sectoral weakness may be spreading into other industries.
  • The jobs report offered some encouragement, even as the details were not entirely positive. Payrolls rose a decent 136k and the unemployment rate fell to a 50-year low at 3.5%. Still, wage growth cooled, dipping below 3% y/y.
  • Trade developments remained top of mind. After getting the okay from the WTO, the U.S. plans to apply tariffs on $7.5 bn of EU goods in mid-October. This is around the same time it plans to increase the tariff rate on $250 bn of Chinese goods. This increases the chances of tit-for-tat measures, which would expedite the slowdown in global growth.

The Weekly Bottom Line

by Sergio Mariaca on Sep 28, 2019 2:55:43 PM |Share:

Here is what happened in the Capital Markets this week.

The Weekly Bottom Line (please click link to open)

The Weekly Bottom Line, courtesy of TD Economics, includes a review of market performances, recent key economic indicators, a calendar of upcoming key economic releases, and other relevant data. The highlights from this week’s report include: 

  • A downturn in U.S. consumer confidence and rising political risks as the House began impeachment inquiries against President Trump, triggered volatility in global markets.
  • U.S. personal incomes jump in August (to 0.4% month-on-month from 0.1% previously), even as spending was subdued (0.1% in August vs. 0.5% in July).
  • Activity in the housing market continued to perk up with larger-than-expected rises in both new and pending home sales on the heels of similar increases in housing starts and permits last week.

The Weekly Bottom Line

by Sergio Mariaca on Sep 21, 2019 3:25:00 PM |Share:

Here is what happened in the Capital Markets this week.

The Weekly Bottom Line (please click link to open)

The Weekly Bottom Line, courtesy of TD Economics, includes a review of market performances, recent key economic indicators, a calendar of upcoming key economic releases, and other relevant data. The highlights from this week’s report include: 

  • In the main financial event of the week, the Federal Reserve cut its key lending rate by 25 basis points, but was mum on the prospect for additional cuts. Our latest forecast sees slower economic growth leading to at least one more rate cut.
  • Fed rate cuts will help to offset some of the dampening effects of trade-uncertainty and weak global growth. In fact, this week saw early signs that the American housing market is responding to lower rates.
  • Oil prices spiked early in the week on the attack in Saudi Arabia but gave up much of the gains as the week ended. Elsewhere, the strike at GM is likely to add volatility to the economic growth profile.

U.S. Housing Starts and Permits

by Sergio Mariaca on Sep 19, 2019 3:32:00 PM |Share:

Housing starts jump to a new cycle high in August

  • U.S. housing starts rebounded by 12.3% in August, after three straight months of declines. Markets were expecting a smaller 5% jump. Housing starts were 1.36 mn units in August, a new cycle high.
  • August's rebound was concentrated in multifamily units, up 32.8%. Single family starts were also higher for the third consecutive months, rising 4.4%.
  • Permits were higher for both single (+4.5%) and multifamily (+13.3%) units in August. 
  • Regionally, most of the country posted double-digit gains in housing starts in August, including the Northeast (+30.5%), Midwest (+15.4%) and South (+14.9%). While overall starts were flat in the West, starts of single family homes were up 5.3% in the region.

Key Implications

  • Well that is more like it. For some time all the stars have been aligned on the demand side for new home construction: unemployment is very low, mortgage rates have fallen significantly, and we've seen solid gains in wages. In August, we finally started to see a more encouraging response on the supply side. 
  • Looking at the six-month trend, multifamily construction has rebounded sharply since its weakness over the winter. While single family home construction is showing nascent signs of an upturn after decelerating in the latter half of 2018. A healthy gain in permits for both segments suggest the upturn will continue in the near term. 
  • There are many downside risks confronting the U.S. economy, which we expect will lead the FOMC to cut rates a quarter point later today. New home construction has long been an area of disappointment in the domestic economy, but today's data provides some hope that things may be looking up for the sector. 

The Weekly Bottom Line

by Sergio Mariaca on Sep 14, 2019 3:21:00 PM |Share:

Here is what happened in the Capital Markets this week.

The Weekly Bottom Line (please click link to open)

The Weekly Bottom Line, courtesy of TD Economics, includes a review of market performances, recent key economic indicators, a calendar of upcoming key economic releases, and other relevant data. The highlights from this week’s report include: 

  • There was good news in the trade negotiations between the U.S. and China this week as the President announced a postponement of tariffs and China exempted key agricultural goods (pork and soybeans) from existing tariffs.
  • The European Central Bank lowered its key policy rate further into negative territory this week and announced a plan to restart asset purchases that will continue “for as long as necessary” to bring inflation back to target.
  • U.S. core inflation picked up in August and retail sales beat expectations. Even so, the Fed is likely to cut rates by 25 basis points when it meets next week, likely citing global growth and trade headwinds.

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