August 2008 - MND NewsWire

There were few surprises in the Personal Consumption and Expenditure (PCE) report released Friday, though economists say the data all points to weaker third-quarter results.

The personal consumption expenditures (PCE) core deflator, the Federal Reserve's preferred measure of inflation, came in line with expectations, advancing by 0.3% (0.273%) in July, and 2.4% (2.426%) on an annual basis, the U.S. Department of Commerce reported.

The strong upward revision to second quarter U.S. GDP was the result of strong exports and the fiscal stimulus package, according to economists who are already looking forward to GDP results from the third quarter.

The number of U.S. residents and businesses that filed for bankruptcy rose 28.9% to 976,831 for the year ended June 30, 2008, according to U.S. court data released Wednesday.

The Administrative Office of the U.S. Courts reported that non- business filings comprised 96.5% of that total...

Mortgage interest rates broke through the gridlock of the last few weeks and, with the exception of one-year adjustable rates, moved lower.

Mortgage activity as measured by the volume of loan applications increased by a marginal 0.5 percent on a seasonally adjusted basis from a week earlier and decreased by 0.9 percent unadjusted. Volume was down 31.2 percent compared to the same week in 2007.

German inflation data and comments from ECB's Lucas Papademos will top the macroeconomic release menu for the European session as U.S. markets prepare for durable goods, weekly oil inventories and a two-year bond auction. Canada's main releases for the day include some employment data followed by a real return bond auction at noon.

The minutes of the Federal Open Market Committee's (FOMC) Aug. 4-5 meeting show that board members "did not see the current stance of policy as particularly accommodative." It also revealed that most members anticipate the next policy move to be a tightening of rates, but the timing and extent of any change would depend on evolving developments.

Despite 46k of downward revisions in the previous two months, which pushed the pace of new home sales lower than expected even with a 2.4% monthly rebound, economists said the Department of Commerce's July report was positive as the level of inventories saw a notable reduction.

Eric Lascelles, chief economics and rates strategist at TD Securities, said "there was an undeniably cheery quality to the report," as the overhang of supply fell to a 10.1-month supply, down from June's upwardly revised 10.7-month supply and marking a six-month low.

Ian Shepherdson, chief U.S. economist at HFE, added: "[W]e still can't say with any confidence that sales have hit bottom..."

Speaking in an interview with Dow Jones Newswires on Monday, Dallas Fed President Richard Fisher (voter) said growth in the U.S. could slow to zero or even turn negative in the second half of 2008, but the main issue remains whether inflation will become persistent or not.