- The Federal Reserve (Fed) decided to hold interest rates steady this week ― an announcement that resounded positively across global stock markets ― but acknowledged that economic conditions may warrant an increase before year-end. Fed officials were split 7-to-3, with the latter group in favor an immediate rate increase. Forecasts, however, showed 10 of 17 officials expect a rate hike this year.
- U.S. housing-market confidence reached its highest level in a year during September, and future sales expectations hit an 11-year high, which could provide a lift to the broader economy. Increased residential construction creates jobs, boosts spending on materials and answers the demand for new housing in a tight market.
- Housing starts and permits fell in August by 5.4% and 0.4%, respectively; however, permit growth for single-family homes (a key indicator of housing demand) expanded by 3.7%, which is a good sign for long-term housing-market performance.
- Mortgage purchase applications declined by 7% for the week ending September 16, causing year-over-year growth to decelerate by 3%. Refinancing also dropped by 8% to its lowest level since June. An increase in mortgage rates likely caused the moderation in mortgage activity.
- High sale prices and low inventory caused existing-home sales to dip by 0.9% in August, for the second consecutive decline. Sales of previously owned homes account for about 90% of all sales and are an important gauge of the heath of the housing market.
- Initial jobless claims fell by 8,000 to 252,000 for the week ending September 17 — which is a critical week, since it serves as the sample used in the monthly employment report. Continuing claims were down 36,000 to 2.113 million for the week ending September 10. Both readings point to a promising September jobs report.
- Manufacturing growth settled further from already-modest levels in September. New order growth hit its lows for the year as exports slid following a gain in August. Factory activity remains pressured by a subdued business outlook and lackluster global demand.
- U.K. industrial activity remained buoyant, with a gain in domestic orders offsetting weakness in exports (despite recent sterling depreciation, which should provide a boost to export demand). The outlook for industrial output hit its highest level since March.
- Eurozone manufacturing growth has gained in the month to date, partially compensating for moderating services-sector growth. New orders edged upward, although optimism in services business fell to a 21-month low.
- The Bank of Japan (BOJ) left its short-term interest rate unchanged this week and announced its new goal of keeping the 10-year Japanese government bond yield at zero, stating it will alter its bond-buying pace appropriately in order to meet this goal. The BOJ intends not only to achieve, but temporarily exceed, its target inflation level (currently 2%) in an effort to improve inflation expectations of consumers, investors and businesses.
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