FinSer 

 Financial Focus

July 30, 2021 
 

     GOOD MORNING! The US economy grew at a 6.5% annualized growth rate in the second quarter. The number was substantially below consensus estimates but it was because supply labor constraints forced inventory liquidation (a subtraction from GDP) that held the top-line figure down. Not constrained was the consumer, the main driver of the economic rebound for the second consecutive quarter. Also in evidence were price pressures as the core PCE Deflator increased at a 6.1% annualized quarterly rate. Once traders and investors went through the numbers, stocks began to move up. Treasury yields reconnected with stocks and also edged upward. Demand for the 7-year T-note was weak. The dollar ebbing lower supported commodity prices.
     Based on early trading in US stock index futures, the benchmark equity indices may stumble into the end of the month. In spite of the early outlook (and poor predictor) the indices will likely post gains for the month (the 6th consecutive for the S&P) and with double digit gains year-to-date. Bugging the markets are the hysteria surrounding the delta variant and Amazon’s earnings disappointment. Bugging a smaller portion of the market is that the cost of homemade tinfoil hats will go up as the price of aluminum hit a 3-year high on strong demand (it’s always good to have spare hats and an extra supply of microwaveable popcorn to put under the hat as an early warning system) and faltering supply. Treasury yields remain connected to stocks and have edged lower in early trading. On tap today for the markets is rebalancing and positioning for month-end, some economic data and the re-start of talking Fedheads ((St. Louis Fed Prez Bullard and Governor Brainard). The final economic releases are June’s personal income, spending, savings, associated PCE Deflators and the final July University of Michigan Consumer Sentiment Index. Of the reports, the markets will be most interested in the headline and core (excluding food & energy) PCE Deflators.    

GENERAL
TODAY             
PREVIOUS        
FED FUNDS
0.0% to 0.25% 0.0% to 0.25%
1 MONTH LIBOR
0.09200% 0.09013%
S & P 500
4419.15 4400.68
GOLD
1832.30 1826.40
YEN
109.62 109.87
EURO
1.1903 1.1873
WEST TEXAS CRUDE
73.62 72.39
T-BILLS
YIELD                
YIELD                 
3 MONTH
0.04 0.04
6 MONTH 0.04 0.04
1 YEAR
0.06 0.06
T-NOTES / BONDS
YIELD                 
YIELD                  
2 YEAR
0.19 0.21
3 YEAR 0.35 0.38
5 YEAR 0.70 0.73
10 YEAR
1.24 1.26
30 YEAR 1.89 1.91
                                                                                                 Data Source: Bloomberg Financial Markets