Daily News 7/24/2015
July 24, 2015
Friday – July 24
The Commerce Department reported on Friday that June New Home Sales unexpectedly declined by 6.8% from May to an annual rate of 482,000, below the 550,000 expected. The June reading was the slowest pace in seven months. May was revised lower to 517,000 from the original estimate of 546,000. The 482,000 is 18.1% above the June 2014 estimate of 408,000. The decline could be due in part to tight supply and fewer new listings as construction is expanding at a slower pace than the sales of new homes.
The two-day Fed meeting kicks off next Tuesday with the monetary policy statement being released at 2:00 p.m. ET on Wednesday. Federal Reserve members are in a sort of conundrum as they need to get interest rates back to more normal levels, however they don’t want to raise them prematurely and trigger a slowdown in an improving economy. The central bank controls the Fed Funds Rate, which is currently at 0.25% and has been at this level since December of 2008. The Fed Funds Rate is the rate in which banks charge each other for overnight loans to meet their reserve requirements.
The government will release Gross Domestic Product (GDP) next week for the second quarter as investors look for a turnaround in the world’s largest economy. The first quarter saw negative growth of -0.2%, but there may not be a big snap back this year with rising health care costs and consumer spending easing a bit due to slow wage growth. In 2014, first quarter GDP was -2.1%, but rebounded strong in the second quarter to +4.6%. The report will be closely watched by investors around the globe.