US Stocks were mostly lower this week. The situation with Greece and the rebalancing of the Russell indexes were cited as causes. European stocks actually rose as the monetary stimulus seems to be adding to Europe’s economic growth rate. US Treasury yields rose and prices fell based on improving economic data. The dollar rose sharply. Energy prices were little changed but other commodities rose. Chinese stocks were sharply lower over growth concerns.
The ongoing drama of the Greek debt was an influencing factor on market activity as sentiment vacillated along with the headlines. Heading into this weekend there was optimism about a deal being reached. However, Prime Minister Tsipras’ announcement at 1:00 a.m. local time Saturday of a referendum on July 5th on whether to accept the creditor’s terms and a request for a one month extension of the bailout was swiftly rejected by a meeting of the 19 finance ministers of the European Union. This leads the way for a messy default as early as Tuesday. While this may create some market volatility on Monday I believe that since the EU’s plan B for a potential Greek default and exit from the EU.has been in the works since 2012 they should be able to prevent this from having a longer term impact on the global markets. Also, this weekend China has cut their interest rates for the fourth time this year.
In particular this past week:
- The National Association of Realtors reported that existing home sales rose 5.1% in May to the highest level since November 2009. Indications were that younger buyers are returning to the market.
- The Commerce Department reported
- New home sales rose 2.2% in May to the highest level since February 2008. April’s estimate was increased to an 8.1% gain up from the previously reported 6.8%.
- The first quarter’s gross domestic product’s second revision was higher than previously expected. Now first quarter’s GDP is measured at -0.2%. Previously, it had been revised down to -0.7%. Better consumer spending and inventory builds were attributed to the better number.
- Personal spending increased a seasonally adjusted 0.9% in May, the biggest increase since August 2009. This follows a revised 0.1% increase in April.
- Personal income rose 0.5% in both April and May.
- The personal consumption expenditures price index rose a seasonally adjusted 0.3% in May, the biggest increase in over two years. The increase was attributed to increases in gasoline. Food prices were unchanged. Excluding food and energy prices rose only 0.1%. From a year ago, core prices have risen only risen 0.2%. Excluding volatile food and energy, prices have risen 1.2% year over year. This is still below the FED’s target of 2%.
- The Labor Department reported that first time claims for unemployment rose 3,000 to 271,000 in the prior week, better than expectations. The four week moving average of claims fell 3,250 to 273,750.
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Loren C. Rex, CFP®, AIF® Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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