Monthly Archives: July 2015

Chicago Fed: US Growth Returns To Historical Trend Rate

The Chicago Fed National Activity Index’s three-month average (CFNAI-MA3) increased to -0.01 in June, reflecting US economic growth that’s effectively at the historical trend rate (i.e., a reading of zero). The rise marks the third consecutive month of modest improvement in economic output, according to this metric in today’s report from the Chicago Fed. The revised data for last month “suggests that growth in national economic activity was very close to its historical trend,” the bank noted in a press release.
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Recent Data Points To A Rebounding US Housing Market

The housing market continue to show signs of recovery after a soft first quarter. The latest hint: yesterday’s better-than-expected rise in existing home sales. Purchases advanced at the strongest pace in over eight years, reaching a new post-recession seasonally adjusted high of 5.49 million units in June. The update follows last week’s bullish news that new residential construction in June is close to a post-recession high while sentiment in the home-building industry this month is near a ten-year high.
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Chicago Fed Nat’l Activity Index: June 2015 Preview

The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to rise fractionally in the June update that’s scheduled for tomorrow (July 23), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for -0.12 is slightly above the -0.16 reading for May, which reflects a below-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for June as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s below the historical trend rate but still well above the tipping point that marks the start of a new recession.
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Treasury Market Continues To Anticipate A Near-Term Rate Hike

Soft pricing in raw materials will likely delay a Fed rate hike for the US, opines Michael Hewson, chief market analyst at CMC Markets UK. “Given that weak commodity prices are likely to prompt a ripple-out disinflationary effect, it is hard to see how the Fed would even consider hiking rates against such a weak backdrop,” he told CNBC on Monday. But St. Louis Fed President James Bullard said this week that there’s “more than a 50% probability right now” that the central bank will raise the target rate at the monetary policy meeting scheduled for September 16-17.
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The Remarkable Dominance Of US Equity Performance

Among the recurring themes in the global capital markets in recent years is the ongoing preeminence of the US stock market as a performance leader. When measured in terms of relative returns for the major asset classes, it’s been game, set, match. That’s good news for investors who’ve maintained healthy allocations to US equities in the last several years–and a source of frustration for everyone else. The supremacy of American stocks will end at some point, but for the moment there’s no sign that a changing of the guard is at hand.
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US Business Cycle Risk Report | 20 July 2015

The US economy has had a rough first half in 2015, but the pace of growth is picking up. The Atlanta Fed’s GDPNow model projects a second-quarter expansion of 2.4% (seasonally adjusted annual rate), based on the July 17 estimate. That’s a modest rise, but it represents an encouraging rebound from Q1’s mild contraction. It’s debatable if we’ll see the rate of growth continue to improve in the second half of the year. Meantime, a broad review of economic and financial indicators continues to reflect a positive trend for the macro profile through June. In other words, the current data strongly suggest that last month wasn’t the start of a new recession.
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