Chandler Bond Market Review

Economic Roundup August 2013

Consumer Prices

In June, overall CPI inflation rose to 1.8% on a year-over-year basis from 1.4% in May.  The year-over-year Core CPI (CPI less food and energy) declined slightly to 1.6% from 1.7%.  The core inflation rate is trending below the Fed’s long-term goal of 2.0% and remains below the trigger rate for policy action of 2.5%.

 Retail Sales

In June, Retail Sales rose 5.7% on a year-over-year basis.  On a month-over-month basis, Retail Sales increased 0.4% in June which was below the +0.8% consensus forecast.  Overall, recent consumer spending trends have been healthy. 

Labor Markets

The July employment report was disappointing as payrolls increased by 162,000 vs. the 175,000 consensus estimate.  The net revisions for job growth in May and June were negative 26,000.  Average nonfarm payroll growth over the past three months has been about 175,000.  Private payrolls increased 161,000 in July while government jobs rose 1,000.   The unemployment rate declined to 7.4% from 7.6%.  Overall, the jobs report was somewhat weak.

Housing Starts

Single-family housing starts fell slightly in June to 591,000 from 596,000 in May.  Meanwhile, multifamily starts dropped 26.2% in the month.  Housing permits also declined in June by 7.5% after falling 2.0% in May.  Recent housing data has been generally favorable, but the most recent housing starts report was disappointing.

 

Credit Spreads August 2013

Economic Data August 2013

 

 

 

 

RISKS AND OTHER IMPORTANT CONSIDERATIONS

This report is provided for general information purposes only and should not be construed as specific legal, tax, or financial planning advice. All opinions and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy. This information should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest, credit, and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions,especially during periods of rising interest rates.

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