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US Sentiment Increases

James Boston
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The Federal Reserve Bank of Dallas has just released it’s monthly Business Index for the July. This now stands at 12.7 compared to a June reading of 11.4, the market held an expectation of this number coming in at 12.0 for the month.
Additionally, Markit Economics have published the preliminary July Purchasing

Managers Index (PMI) for the US Services Sector, this is currently reading at 60.9, by comparison last month’s final figure was 61.0 and the consensus estimate was for a reading of 59.8. The preliminary Composite PMI therefore stands at 61.0 this matches the 61.0 seen last month and a market expectation of 60.0.

The National Association of Realtors has also published June’s Pending Home Sales figures earlier today. The year on year number is showing at -7.3% compared to the May reading of -5.2% and the market consensus estimate of -8.9%. Month on month this figure is -1.1%, the previous reading stood at 6.1% and markets expected a figure of 0.5% in June.

The President of the Dallas Fed, Richard Fisher, has now joined the growing ranks of US Federal Reserve chiefs that are calling for higher interest rates. Fisher, in a recent speech noted that the US Fed was at risk of ‘staying too loose for too long’. The Fed is only three months away from completely winding up it’s bond buying program, and it is publically stated policy that rate hikes will not begin until ‘six months after the completing of this program’. This implies that the earliest juncture for the Fed to increase it’s key target interest rate would be May of 2016 or 9 months from now. As this dissention continues to grow among Federal Reserve chiefs it is unlikely that the FOMC will be able to hold out on rate hikes for this length of time.

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