US stocks had a tricky week as investors fretted about when the Fed will begin tapering of its stimulus. While majority of Fed policymakers said they were "broadly comfortable" with the tentative plan sketched out in June by Fed Chairman Ben Bernanke, minutes from the FOMC meeting gave no signal whether tapering could begin next month.
On the economic front, positive manufacturing data from China buoyed commodity prices and lifted hope for a stable global recovery. The bullish sentiment however, was tempered by a sharp drop in new home sales which slumped in July to their lowest level in nine months.
Following is an economic review for the week August 19 - August 23, 2013.
Wednesday, August 21
US Existing Home Sales::
Existing home sales jumped 6.5% to an annual rate of 5.39 million units, well above analysts' expectations of an increase to a 5.15 million unit pace and marked the fastest pace of sales since November 2009.
US Crude Oil Inventories:
US crude oil inventories fell to a seasonally adjusted annual rate of -1.428 million barrels, from -2.812 million barrels in the preceding month.
FOMC Meeting Minutes:
Fed officials were "broadly comfortable" with Chairman Bernanke's plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon.
HSBC Flash Manufacturing PMI:
Activity in China's key manufacturing sector recovered strongly in August — HSBC flash manufacturing Purchasing Managers Index (PMI) hit a four-month high of 50.1 in the month from a final reading of 47.7 in July, moving above the 50 threshold that demarcates expansion of activity from contraction.
Thursday, August 22
Canada Retail Sales:
Retail sales fell by 0.6% in June from a month earlier, weaker than analysts' forecast of a 0.4% drop. Business was bruised by the effects of Alberta flooding and a Quebec construction strike, but perhaps more worrisome was a steeper slide in Ontario despite higher car sales there.
US Unemployment Claims:
US unemployment claims rose by climbed 13K to 336K last week but held close to a six-year low and gave a positive signal for hiring during the month.
Friday, August 23
Second Estimate UK GDP:
UK Q2 GDP was revised higher in a second preliminary estimate. UK GDP is now estimated to have risen 0.7% on a quarterly basis, better than the previous estimate for 0.6% GDP growth and the 0.3% economic expansion seen in Q1. Exports were reported significantly higher in Q2, rising 3.6% on a quarterly basis, as imports also beat estimates by rising 2.5%. Private consumption rose an expected 0.4% in Q2, while government spending beat expectations for no change in spending, by rising 0.9% over Q1.
Canada Consumer Price Index:
Housing starts increased 5.9% in July to a seasonally adjusted annual rate of 896K units. While that was a recovery from June's decline, it was below economists' forecasts for a 900K rate, suggesting that higher mortgage rates could be slowing the housing market's momentum.
Canada Consumer Price Index:
Canada's core inflation was 1.4% on a year-over-year basis in July, well below the Bank of Canada's medium-term inflation target of 2%, while the headline index rose by 1.3%.
US New Home Sales (July 2013):
Sales of new single-family homes fell sharply in July to their lowest level in nine months, casting a shadow over the country's housing recovery.Sales dropped 13.45to an annual rate of 394K units.
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