A Macro View - July Monthly Recap
Chart of the Week
- Domestic equities were down for the week, with small cap stocks decreasing the most. International equities ended the week in negative territory, falling more than their domestic counterparts, with emerging markets stocks faring the worst.
- Treasury yields across the curve declined through end-of-day Thursday, with longer-term yields falling more than shorter-term yields.
- The US dollar weakened against a basket of major trade partners’ currencies during the week, reflecting increased fears over currency wars.
- Commodities contracted for the week, as declining energy prices outweighed the strong week for gold.
- In other economic news, The Producer Price Index for final demand increased by 0.20% last month, bringing the final demand index up 1.70% for the 12 months ended in July. The muted producer prices may be a result of the prolonged global trade war, which some analysts believe is causing a slowdown in manufacturing.
- The Chinese yuan dropped to its lowest level against the dollar since 2008. Many believe that this was in response to the US’s announced 10% tariffs on $300 billion of Chinese goods beginning Sept. 1, but the People’s Bank of China denied intentionally devaluing its currency. Regardless, the U.S.Treasury office has labeled China as a currency manipulator.
- Gold posted strong gains this week, up 2% on Monday alone, and reaching a price of $1,515 on August 8, its highest level in more than six years. As of midday Friday, gold was up almost 4.50%. The flight to gold is assumed to be the result of increased anxiety about further trade escalations between China and the US, and growing concerns about a global economic slowdown.
- Labor markets remain robust, as weekly unemployment claims were 209,000 for the week of August 3, marking an unexpected decrease of 8,000. Additionally, Nonfarm Payrolls increased by 164,000 in July. Despite the continued growth, there is concern about a weakening labor market, as domestic Gross Domestic Product (GDP) is expected to slow in Q3.
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