Economic and market updates

Economic Update for August 3, 2015

Highlights of news-making events of the past week, from the economy and profits to Europe and interest rates.

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economy

In an advance estimate, the BEA reported second-quarter GDP increased at an annual rate of 2.3%. A flash Markit Economics report noted services grew slightly in July. Durable goods orders increased 3.4% in June, the Commerce Dept. stated. The NAR found pending home sales slipped 1.8% in June. Home prices posted a 4.4% annual increase in May, S&P/Case-Shiller found.

employment

The BLS reported the Employment Cost Index rose 0.2% in the second quarter. Initial jobless claims increased by 12,000 to 267,000 in the week ended July 25, 2015, according to the Labor Department. The four-week moving average was 274,750.

profits

As of July 24, 2015, of the 187 S&P 500 Index companies reporting second-quarter earnings, 138 — or 73.8% — beat analysts' estimates, according to S&P Dow Jones Indices.

emotion

The University of Michigan's final reading on the index of consumer sentiment fell to 93.1 in July from 96.1 in June. The Conference Board Consumer Confidence Index declined in July. The Bloomberg Consumer Comfort Index fell to 40.5 in the week ended July 26, 2015, from 42.4 in the prior week.

europe

In a flash Eurostat report, eurozone inflation is expected to be 0.2% in July, which is stable compared with June. The European Commission's July Business Climate Indicator rose and its Economic Sentiment Indicator edged higher in the euro area. In July, the Ifo Business Climate Index for German trade and industry rose and the GfK Consumer Climate study for Germany showed sentiment stabilized.

rates

The yield on the 10-year U.S. Treasury note traded in a narrow range. The FOMC voted to maintain the current federal funds rate near zero, and added it would raise the target range “when it has seen some further improvement in the labor market.”

risks

  • Interest-rate volatility as the market considers when the Fed will raise interest rates
  • Geopolitical risk in peripheral Europe and the Middle East
  • Currency instability in Europe

All economic and performance information is historical and does not guarantee future results. The views and opinions expressed are those of Putnam Investments, are subject to change with market conditions, and are not meant as investment advice.