This morning’s data deluge provided a perfect snapshot of the U.S. economy at the current time. A robust consumer, driven by strong real compensation in the first quarter of the year, continued to prop up the American economy, even as the domestic manufacturing sector contracted by 0.5% on a year-ago basis. For those not keeping score at home, ... READ MORE >
Joe Brusuelas
Real negative yields signal business cycle nearing an end
The increasing probability that the U.S.-China trade and financial war will be a permanent feature of the global economic landscape is the catalyst for the inversion of the two-year-10-year Treasury yield curve on Wednesday. This inversion of that portion of the curve is the first since June 2007, which marked the start of the Great Recession. Equally ... READ MORE >
Trade war takes dangerous turn toward currency wars: What could happen next?
Chinese fiscal and monetary authorities permitted the yuan early this week to slip below the important psychological level of 7 to the dollar for the first time since 2008. It was a retaliatory measure by China against President Trump’s threat to impose an additional 10% tariff on $300 billion in Chinese exports, beginning Sept. 1. The Chinese government ... READ MORE >
The RSM Brexit Stress Index: Pound’s decline signals rising concern
The RSM Brexit Stress Index rose sharply in the week, signaling significant worry in the market following depreciation of the British pound that will result in higher costs for food, fuel and other consumer staples for U.K. residents. The composite index, which measures economic stress surrounding Britain’s impending departure from the European Union, ... READ MORE >
US July employment report: “A Gentleman’s C”
Downward revisions to the May and June estimate of total employment as well as a decline in total and aggregate hours worked cast a pall over a total change in July employment of 123,000 (164,000 top line less net downward revision of 41,000) and the unemployment rate that held steady at 3.7%. While job gains were solid in manufacturing, goods production, ... READ MORE >
US manufacturing–slipping away
The U.S. manufacturing sector slipped closer to contractionary terrain in July, which in our estimation reaffirms the decision by the Federal Reserve to cut interest rates by 25 basis points at its July meeting on Wednesday. The top line sentiment index in the Institute for Supply Management’s manufacturing survey declined to 51.2 from 51.7 a month earlier, ... READ MORE >
US employment preview: hiring deceleration amid steady unemployment rate
The U.S. economy likely generated roughly 150,000 jobs in July and the unemployment rate remained steady at 3.7%. The July employment report—due to be released by the government Friday—is traditionally impacted by seasonal adjustments that will likely include sharp slowing in education and government hiring along with a notable pick up in leisure and ... READ MORE >
Fed cuts interest rates with another cut likely in September
Reductions or increases in U.S. Federal Reserve’s policy rate are often like trying to kill a mosquito with an anvil; they may get the job done but the fallout is always widespread and sure to cause a commotion. So it is with today’s rate cut as the Federal Open Market Committee sought to provide a cushion to a rapidly deteriorating global economic ... READ MORE >
FOMC Preview: Insurance against a greater pace of economic deceleration
A sagging global economy dragged down by a trade war and a domestic manufacturing sector on the edge of contraction are sufficient risks to warrant a 25-basis-point-reduction in the federal funds rate to 2% to 2.25% percent when the Federal Open Market Committee concludes its policy meeting on Wednesday. In addition, we expect the committee will end its ... READ MORE >
The RSM Brexit Stress Index: Increased volatility and higher stress as pro-Brexit PM takes Britain’s helm
The RSM Brexit Stress Index moved higher this week on increased currency market volatility and sobering economic news from the U.K.’s trading partners as Boris Johnson, the pro-Brexit Conservative Party candidate, was elected prime minister. The composite index, which measures economic stress surrounding Britain’s impending departure from the European ... READ MORE >