Retail sales rose as expected in June, but May figures were revised higher – consistent with a pickup in consumer spending growth in 2Q18. Industrial production rose as expected in June, reflecting a rebound from a fire at an auto parts supplier in May. However, ex-autos, manufacturing output was at a relatively lackluster trend in the first two quarters of this year. Housing starts sank unexpectedly in June, but these figures are reported with a gigantic amount of statistical uncertainty. Single-family permits (reported much more accurately) improved (up 6.7% y/y for 2Q18). The Fed’s Beige Book reported that “manufacturers in all districts expressed concern about tariffs and in many districts reported higher prices and supply disruptions that they attributed to the new trade policies.” The IMF remained optimistic about global growth in its revised World Economic Outlook, but cautioned that the U.S.’s announced and anticipated tariff increases have helped shift the balance of risks to the downside.
President Donald Trump criticized Fed policy in a CNBC interview, a rare (but not entirely unprecedented) presidential faux pas. The White House attempted to walk that back (“the president respects the independence of the Fed”), but Trump doubled down against the Fed the next morning.
Next week, the focus is likely to be on the advance GDP report for 2Q18. Consumer spending growth is expected to have picked up (following a soft 1Q18) and a narrower trade deficit should add significantly to overall growth. There is always uncertainty heading into the advance estimate, but more so this time. Each July, the government releases benchmark revisions to the GDP data for the previous five years. However, this will be a comprehensive revision, incorporating changes to the methodology (especially to the seasonal adjustment) and the complete history is subject to revision. There may be some confusion in how the report is interpreted. One should focus on the average GDP growth for the first and second quarter together, consumer spending, and business fixed investment.
|Last||Last Week||YTD return %|
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.301||1.297|
|Dollars per Euro||1.164||1.163|
|Japanese Yen per Dollar||112.47||111.91|
|Canadian Dollars per Dollar||1.327||1.259|
|Mexican Peso per Dollar||19.051||17.486|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||3.75||3.80|
As of close of business 07/19/2018
As of close of business 07/19/2018
|July 23||—||Existing Home Sales (June)|
|July 25||—||New Home Sales (June)|
|July 26||—||Jobless Claims (week ending July 14)|
|—||Durable Goods Orders (June)|
|—||Advance Economic Indicators (June)|
|July 27||—||Real GDP (advance 2Q18 + comprehensive benchmark revisions)|
|—||UM Consumer Sentiment (July)|
|July 31||—||Employment Cost Index (2Q18)|
|—||Personal Income and Spending (June)|
|—||CB Consumer Confidence (July)|
|August 1||—||ISM Manufacturing Index (July)|
|—||Fed Policy Decision (no press conference)|
|August 3||—||Employment Report|
|September 26||—||Fed Policy Decision (Powell press conference)|
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