July 27, 2015

Last week in review:

Greek banks reopened on Monday of last week, although stocks remained closed.  Greece then repaid 6.8 billion euros due to the European Central Bank and the International Monetary Fund.  However, liquidity problems are the still the biggest concern as banks had 40 billion euros withdrawn in the 6 months prior to banks closing.  On Wednesday, the Greek parliament approved reform measures to further open the door toward negotiations of a Greek bailout.  The amount of money needed for the bailout is estimated at 86 billion euros.

In terms of economic data in the US, it was a light week last week.  Both existing and new home sales were better than expected and jobless claims were lower than expected.

Today:

Treasuries prices have moved higher today as stocks have experienced a large move downwards.  Stocks in China lead the decline as they dropped almost 8.5% in the overnight trading hours due to poor industrial economic data.

The week ahead:

The 10 year treasury reached 2.21% this morning, nearing the low end of the range.  Resistance comes in around 2.19%, with 2.13% being the bottom of the range if it goes below 2.19%.  On the reverse side, if we see a sell off soon, the first support doesn’t come in until 2.50%, with the top of the range being around 2.65%.

For economic data, it will be a packed week.  On Tuesday we have the CS home price index, as well as consumer confidence.  Home prices are expected to increase by 0.30% for the month of May.  On Wednesday of this week the fed will be releasing their July federal funds rate decision, but they are expected to leave the target rate at 25 bps for now.  On Thursday, US GDP, weekly jobless claims, and personal consumer are coming out.  GDP is expected to grow at an annualized pace of 2.5% in the second quarter.  Finally, on Friday, we have the University of Michigan consumer sentiment index.

Eric Swanson, CFA