Publications

U.S. News

According to the Financial Times, President Trump has announced he will meet with China’s president Xi Jinping at this month’s G-20 summit to resume U.S.-China trade discussions. Despite market hopes that the meeting will culminate in an agreement to resolve rising trade tensions, President Trump indicated that the U.S. would walk away from negotiations if they are deemed unfair. FT

The Wall Street Journal reports that the boom in employee bonuses resulting from the 2017 tax cuts has faded, according to data released by the Labor Department. Smaller bonuses at the beginning of this year are consistent with data that suggest some benefits of the tax law were short-lived; another possibility is that employees are negotiating for pay raises rather than one-time bonuses in the current tight labor market. WSJ

U.S. Economic Indicators

Privately-owned housing starts fell 0.9% in May to a seasonally adjusted annual rate of 1.27 million (down 4.7% year-over-year). Housing permits rose 0.3% to a 1.29 million annual pace in May but are down 0.5% from last year. Census Bureau Report

U.S. News

The Wall Street Journal reports that the choice facing Fed officials at this week’s FOMC meeting is between cutting rates now if they expect the economic outlook to worsen or holding off until next month to acquire more information. The case for cutting rates is notably stronger than it was last month given increasingly mixed U.S. economic data and escalating trade tensions, and officials are mindful that historically low interest rates mean they have less room to cut in the event of a downturn. WSJ

According to the Washington Post, India has imposed tariffs as high as 70% on certain U.S. agricultural, chemical, and metal products in retaliation for the revocation of India’s preferential trade privileges. Although the retaliation affects just $241 million worth of goods – far less than the hundreds of billions affected in trade conflicts with China and Mexico – they represent a new pressure point in an increasingly tense global economy ahead of next week’s G-20 summit. WaPo

U.S. Economic Indicators

The June Empire State Manufacturing Survey indicates that business activity took a sharp downturn this month, as the headline index fell 26.0 points to -8.6, its largest monthly decline on record. The new orders index declined 22.0 points to -12.0 while the shipments index fell 7.0 points to 9.7; meanwhile, the index for number of employees declined 8.0 points to -3.5 and the hours worked index turned negative, indicating a slightly shorter workweek. NY Fed Report

The NAHB Housing Market Index fell 2.0 points to 64.0 in June. All major components of the index inched lower this month, driven by persistent lot shortages and a lack of skilled labor. NAHB Report

U.S. News

The Wall Street Journal reports that the Federal Reserve’s most recent dot plot, a chart of individual Fed officials’ interest rate expectations, shows that most officials expect the federal funds rate to remain unchanged in 2019, despite bond markets predicting at least two rate cuts this year. Escalating trade tensions have made the dot plot less useful than in the past, as the Fed’s economic outlook depends on which of two uncertain scenarios – resolved or worsening trade frictions – ultimately comes to pass. WSJ

The Financial Times reports that the U.S. Chamber of Commerce submitted a letter to the Office of the U.S. Trade Representative calling for a reversal of tariffs imposed over the last two years and condemning proposed tariffs on an additional $300 billion of Chinese goods. The letter comes ahead of a week of hearings on the latest proposed tariffs with a range of specialist industry groups and large U.S. companies. FT

U.S. Economic Indicators

The University of Michigan Consumer Sentiment Index declined 2.1 points to 97.9 in the preliminary June reading and is down 0.3 point from last year. The Index of Consumer Expectations fell 4.9 points to 88.6, while the Current Economic Conditions Index rose 2.5 points to 112.5. University of Michigan

Retail sales rose 0.5% in May and are up 3.2% from a year ago. Core sales — which exclude autos, gasoline, building materials, and food services —  increased 0.5%. Census Bureau Report

Industrial production rose 0.4% in May (up 2.0% year-over-year) after falling 0.4% (revised) in April. Capacity utilization increased 0.2 point to 78.1 in May. Fed Report

Business inventories rose 0.5% in April and were up 5.3% from April of last year. Manufacturers’ sales declined 0.5% in April but were up 3.2% compared to a year ago. Census Bureau Report

U.S. News

The Wall Street Journal reports that the International Energy Agency announced a cooling global economy will likely slow growth in oil demand in 2019, despite burgeoning supply. The IEA emphasized that softening demand amid weakening economic sentiment is the market’s primary concern, echoing similar concerns expressed by OPEC and the U.S. Energy Information Administration. WSJ

U.S. Economic Indicators

Initial jobless claims increased 3,000 to 222,000 last week. The four-week moving average rose 2,500 to 217,750. DOL Report

U.S. News

According to the Wall Street Journal, China’s Vice Premier Liu He announced that external economic pressures will ultimately serve China’s long-term interests by spurring China to create stronger domestic capital markets and more innovative industrial supply chains. While avoiding mention of U.S.-China trade tensions specifically, Liu urged economists to ignore China’s monthly indicators, which have deteriorated during the trade war. WSJ

Bloomberg reports that a recent World Economic Forum report found that retirement account balances for older adults aren’t increasing on pace with life expectancies across the globe. The average 65-year-old American has enough savings to cover just 9.7 years of retirement, leaving an average retirement savings gap of 8.3 years for men and 10.9 years for women. Bloomberg