Economic Update 7-25-2022
- Economic data for the week included weakness in housing markets—seen in disappointing results for existing home sales, housing starts, and homebuilder sentiment. The index of leading indicators continued a string of monthly declines, and jobless claims rose.
- Global equities experienced gains again last week, with foreign markets leading U.S. Bonds fared positively as well, as long-term interest rates tempered, and foreign debt was helped by a weaker dollar. Commodities were mixed with metals recovering, but grains prices falling with higher expected imports from war-torn Ukraine.
U.S. stocks fared positively again, with lackluster economic data pointing to the idea the Fed may not need to raise rates as aggressively as feared (such as an upcoming week increase of potentially 0.75% rather than 1.00%), as well as continued negative sentiment being indicated by low equity ownership and high cash levels, pointing to a potential turnaround. After a positive start Monday, stocks turned mildly negative upon a report that Apple is slowing hiring. In fact, this is how recessions can become self-fulfilling, with companies not wanting to be left holding the bag, so begin the pare back first. The Senate vote in favor of the Chips for America Act, which provides $52 bil. in domestic subsidies for computer chip foundry production and tax credits, boosted tech stocks (notably semiconductors) early in the week.