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06/26/2018
Market Update

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President Trump proposed tariffs on an additional $200 billion worth of Chinese exports and threatened a 20% import tax on European autos as trade tensions continued to mount between the U.S. and its trading partners.
  • President Trump proposed tariffs on an additional $200 billion worth of Chinese exports and threatened a 20% import tax on European autos as trade tensions continued to mount between the U.S. and its trading partners.
  • Housing starts grew by 5.0% in May, driven by multi-family-home construction. However, economists indicated that higher costs in the wake of recently-imposed lumber tariffs could present a future headwind for builders.
  • Existing-home sales slipped by 0.4% in May to an annualized rate of 5.43 million despite an increase in supply, as climbing prices sidelined potential homeowners. The report, which fell short of expectations, suggested rising mortgage rates could also continue to provide a headwind to buyers.
  • Mortgage-purchase applications gained 4% in the week ending June 15, even as mortgage rates remained unchanged and near their highest level in more than seven years. Refinancing activity (which can be sensitive to even small rate changes) rebounded by 6%.
  • Initial jobless claims fell by 3,000 to 218,000 in the week ending June 16. The more-stable four-week moving average declined by 4,000 to 218,000. Continuing claims increased by 22,000 to 1.72 million in the week ending June 2, but remained near a 45-year low. Economists remained confident that the job market is nearly (if not completely) at full employment, as the joblessness rate recently hit 3.8%, an 18-year low.
  • A preliminary reading of Markit’s purchasing managers’ index (PMI) pointed to accelerating growth in June driven by the services sector, which advanced for the twenty-eighth consecutive month; manufacturing, however, saw a tariff-related slowdown, with weakness in new orders and export sales at a two-year low. The report also pointed to swelling cost pressure, which supports the case for additional interest-rate hikes this year.
  • The Philadelphia Fed Survey showed that regional manufacturing growth remained strong despite decelerating to a 19-month low during June; new-order measurements fell sharply, but remained solidly above neutral after hitting a 45-year high in May.
  • The Conference Board’s index of leading economic indicators expanded by 0.2% in May, its seventh straight monthly increase, driven by widespread component strength. The reading, used by economists to gauge the health of the U.S. economy, pointed to ongoing vitality.
  • Economic growth in the eurozone rebounded in June, according to preliminary data from the composite PMI. Momentum increased in the services sector, while manufacturing output slowed to its lowest pace in almost two years.
  • The Bank of England left interest rates at 0.5% in a contested vote by members of the rate-setting Monetary Policy Committee. The central bank also noted that future rate hikes could come sooner than previously anticipated to keep a lid on inflation.





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