AGA Chart Book – July 5, 2013

AGA Weekly Chartbook

1.      1. Global Financial Conditions

  • Global Financial Conditions improved again this week
  • Macro Risk and Financial Market Stress remain near 12 month highs
  • SHIBOR (Shanghai) interbank overnight rate has moderated, returning to 3.67% after spiking above 8% last month
  • The VIX Index (implied S&P 500 volatility) decreased to 14.9 from 18.8 two weeks ago

2.    2. The Economy

  • Economic Data has been better than expected over the last 4 weeks
  • ISM Mfg came in at 50.9 vs. a prior reading of 49
  • Factory Orders grew by 2.1% MoM vs. a prior reading of 1.0%
  • US Non-farm payrolls increased by 195k vs. a prior reading of 195k
  • Better than expected economic data has come from the housing, retail, and business cycle indicators
  • Worse than expected economic data has come from the labor market and personal/household sectors
  • Improvement in US home prices is beginning to benefit state and local tax revenues
  • Vehicle sales have mirrored the improvement in home prices and building permits
  • 30 year Mortgage Rates made new 18 month highs @ 4.70%, up from 4.57% last week

3.     3. Interest Rates and Fixed Income

  • 10 year US Treasury Yields spiked 0.25% on Friday, closing the week at 2.74%, up from 2.48% last week and 1.62% in early May
  • Investment Grade and High Yield Bonds sold off this week, down 1.0% and 1.3%, respectively
  • Investment Grade and High Yield credit spreads narrowed slightly this week, currently at 1.76% and 4.08%, respectively

4.       4. Global Equity Markets

  • Global equities held their medium-term uptrend this week, and the long-term uptrend remains intact
  • After correcting 7.5% from all-time highs, the S&P 500 bounced off of initial support near 1570
  • After diverging for most of 2013, the gap between lofty equity prices and disappointing economic data has narrowed over the last 4 weeks
  • Year over Year estimates for Q2, Q3, and Q4 2013 U.S. earnings growth are 4%, 16%, and 27%, respectively

5.      5. Major Currencies

  • All major currencies are weaker relative to the USD over the last 6 months
  • The Australian Dollar, @ 0.91/USD, has weakened sharply over the last 3 weeks
  • MXN/USD @ 13.08, weakening from 12.93 last week
  • USD/EUR @ 1.28, weakening from 1.30 last week

6.      6. Commodities

  • Commodities (an equally weighted basket) remain in a cyclical downtrend
  • Gold @ $1223/oz., down from $1234/oz. last week

Best Regards,

James

disclosure: The opinions expressed in this Weekly Chart Book report are those of the author. The materials and commentary are strictly informational and should be used for research use only. This bulletin is not intended to provide investing or other advice or guidance with respect to the matters addressed in the bulletin. All relevant facts, including individual circumstances, need to be considered by the reader to arrive at investment conclusions that comply with matters addressed in this bulletin. Charts and information used in this report are sourced from Bloomberg.

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