Lots of data today!
Stocks opened higher as weaker-than-expected economic data appears to be viewed as good news.
The Q2 GDP estimate was revised lower from 2.4% to 2.1%, whereas economists expected it to remain unchanged. The revision was due to downgrades in inventory investment & business spending on equipment & intellectual property products. The pace of growth remains above the Feds non-inflationary growth rate of approximately 1.8%.
The ADP employment report showed that job creation slowed, falling from 371,000 in July to 177,000 August & missing expectations of 200,000. The report showed that pay growth slowed for workers who changed jobs and those who stayed in their current positions. The ADP press release stated that “this month’s numbers are consistent with the pace of job creation before the pandemic.”
Pending home sales increased in 0.9% in July, the 2nd consecutive monthly increase. The Northeast and Midwest posted monthly losses, while sales in the South and West grew. All 4 regions saw YoY declines in transactions. The Mortgage Bankers Association reported that applications grew 2.3% last week. The increase was due to the Refinance Index increasing 3% and the Purchase Index increasing 2%. The average rate for a 30-year fixed-rate conforming mortgage moved to 7.23%.
The advanced international trade in goods release showed that the trade deficit increased 2.6% to $91.2 billion in July. The increase of imports outpaced the increase of exports. Regarding inventories, the advance wholesale inventories were down 0.1% in July and the June percentage change was revised down from -0.5% to -0.7%. Advance retail inventories were up 0.3% in July and the June percentage change was revised down from 0.7% to 0.5%.
Treasury yields are lower, with the 2-year T yield down 2.1 basis points to 4.87%, the 5-year T yield down 2.3 basis points to 4.25% and the 10-year T yield down 1.4 basis points to 4.11%. Advance rates are higher on shorter term and lower on longer term advances.