Speaking to journalists en route to Berlin, Treasury Secretary
Henry Paulson said that his speech on July 2 will focus
on the Federal Reserve’s role as a macro stability regulator.
…He cites as examples appraisers, “fee hungry” mortgage brokers, and
real estate agents who participated in putting home buyers into subprime
mortgages they could not afford.
Investors are preparing for the housing market to level off and perhaps start to rebound.
The ISM-Chicago business barometer remained below 50 for the fifth
consecutive month in June, yet improved more than expected, coming in at
49.6, against expectations that it would fall to 48.0 from 49.1 in
May.
Texas business activity declined further in June
according to the Dallas Fed’s manufacturing report on Monday, whose
business activity index fell to -24.1 from May’s -10.3.
Canadian GDP and the ISM-Chicago Purchasing Manager’s Index will
highlight the start of what is looking to be a busy shortened week on the
North American data front. In the afternoon, comments from Portuguese
Central Banker Vitor-Manuel Ribeiro Constancio will also be closely
watched ahead of the European Central Bank’s rate decision on
Thursday.
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U.S. core PCE, personal income and spending, and final data from the
Michigan consumer sentiment survey will finish off the U.S. economic data
week as Canadians receive industrial product and raw material prices
along with average payroll earnings. Overseas, markets will be looking at
the preliminary figures for German CPI and comments from European Central
Bank President Jean-Claude Trichet.
The Federal Reserve’s preferred measure of inflation,
the personal consumption expenditures (PCE) core deflator, advanced by
0.1% (0.113%) in May, below expectations and contributing to a year-over-
year change of 2.1% (2.139%), according to a report released from the
Commerce Department on Friday morning.
In the minutes released from a meeting of Fed
Governors to approve Bear Stearns’ acquisition by JPMorgan and the
establishment of a lending facility to primary lenders on March 14 and
16, the Fed reaffirmed that the moves were “based on recent, rapidly
changing developments.”
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Condominium sales were the main driver of the 2.0%
rise in existing home sales in May, which came in higher than the 1.2%
gain expected by economists.
The New York Fed created two new entities on Thursday in an effort to
improve the bank’s risk management and communications
among regional and community banks.
The sale of Countrywide Mortgage to Bank of America
absorbed another blow this week as three states took legal action against
the lender.
A final look at U.S. first quarter GDP and initial jobless claims will
be the key releases of the morning followed by the releasing of U.S.
existing home sales. Europeans will be paying attention to comments from
Jürgen Stark of the European Central Bank and energy traders will focus
on the release of weekly U.S. natural gas inventories.