Last week markets had little to think about; this week is full of key reports and more importantly, Janet Yellen at Congress on Tuesday and Wednesday. This morning the stock market continues its choppy and directionless activity. Friday the key indexes were slightly better, this morning the DJIA opened +92, NASDAQ +26, S&P +9 bp; the 10 yr at 9:30 2.54% +2 bp, 30 yr MBS price -8 bps. Not just the US stock market improving today, all major bourses have rallied, from Asia to Europe and now here. And now, here comes the retail sector jumping in; usually when small investors finally get invested it is the last hoorah before a pullback. About $100B has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute. The professionals are increasing their outlook for a pullback and some saying there isn’t much left in the stock market this year.
Another big bank that was at the center of the housing meltdown; Citi agreed to pay $7B in fines that it misled investors about the quality of mortgage-backed bonds sold before the 2008 financial crisis.
By 10:00 this morning the DJIA was running strong with another new all-time high, up 126 points. The rate markets so far are holding well against the strong equity market. The situations in the mid-east are becoming more tedious with Israel, Palestinians, Syrians, Iraqis and Iranians increasing the fear factor keeping investors in safe treasuries.
This Week’s Economic Calendar:
8:30 am June retail sales (+0.6%; ex autos +0.6%)
July Empire State manufacturing index (17.8 from 19.3 in June)
June import and export prices (imports +0.4% from +0.1% in May; exports +0.2% from +0.1% in May)
10:00 am May business inventories (+0.6%)
Janet Yellen testifies at the Senate Banking Committee
7:00 am weekly MBA mortgage applications
8:30 am June PPI (+0.3%, core PPI +0.2%)
9:15 am June industrial production and capacity utilization (production +0.4%, capacity utilization 79.2%)
10:00 am NAHB July housing market index (51 from 49 in June)
Janet Yellen at the House Financial Services Committee
2:00 pm Fed Beige Book
8:30 am weekly jobless claims (310K from 304K last week)
June housing starts and permits (starts 1026K +2.5%; permits 1038K +4.5%)
10:00 am July Philly Fed business index (16.9 from 17.8 in June)
9:55 am U. of Michigan consumer sentiment index 83.0 from 82.5)
10:00 am June leading economic indicators (+0.5%)