 Overnight, we got end-of-the month statistics from Japan. While there was a positive report in the form of stronger than expected household spending for the month of June, a rise in the unemployment rate and a drop in industrial production dampened any enthusiasm for the Japanese economy. |
 Today’s GDP data is another piece of data that underwhelmed, and adds to the string of releases casting a long shadow over the US recovery. It’s a good snapshot of where the economy is right now as it showed that consumer spending is adding less to growth, while business spending on investment actually picked up. |
 The June US durable goods report looked quite awful at first glance. Expectations had been for a modest 0.9-1.0% increase for the month, but instead total orders dropped 1%, after falling 0.8% in May. That would suggest that the string of poor economic releases from the US continues and will cast a heavy shadow on the prospects for the outlook for the recovery. |
 A strong UK sales release and upbeat results about Euro-zone lending and money supply led a move in higher yielders and boosted “risk-on” trades. But, a weak US consumer confidence report took some of the momentum out of risk seeking behavior and caused the greenback to recoup some of its earlier losses. |
 The S&P/Case-Shiller house price index showed housing prices climbing in May, but there are concerns that seasonal factors and the residual influence of the government’s home buyers tax credit are boosting the numbers prior to a fall off in the second half of the year. From a year earlier, the 10-city index rose 5.4%, and the 20-city reading climbed 4.6%. |
 A better than expected new home sales release helped to spur gains in US equities which pushed up higher yielders at the expense of the greenback. The EUR/USD tested its one-week high at the 1.30 level. |
 This week market attention is poised to turn to U.S. economic data, which include second-quarter gross domestic product on Friday. The rest of the week is full of releases as well, with new home sales released today, the Case-Schiller house prices and consumer confidence on Tuesday, durable goods and the Fed’s Beige Book on Wednesday. The week ends with second-quarter GDP, Chicago Purchasing Managers Index and final University of Michigan-Reuters consumer confidence on Friday. |
 The day’s big event was the release of Euro-zone bank stress tests, which were set out to gauge whether Europe’s banking sector has sufficient capital, if the economy suffered another more severe shocks than the financial crisis. The results showed 7 banks needed more capital, but questions remain about if the criteria used was too lenient. |
 Coming into this week the talk in currency markets was the Euro-zone bank stress tests and their results. The final tally was one German and one Greek bank failing, as well as 5 banks from Spain. Still, the market may decide that the test was too lenient and question the credibility of the results. The EUR therefore came under pressure in the immediate reaction to the results. |
Daily Video Recap: US GDP and a Preview of Next Week’s US Releases
Fundamental Updates \ Nick Nasad \ 4:34 PM EDT \ July 30th, 2010In today’s video we dissect the 2nd quarter GDP results and what it means for the US recovery. The economy grew a smaller than expected 2.4% annualized rate. We also cover the important releases to look out for next week.