The major averages enter the final hour mixed on generally positive data as the markets remain seemingly unconcerned about the rapidly escalating trade war with China.
The July TIC report or Treasury International Capital flows showed foreigners enthusiastically financing our deficits with 78.4 billion in securities purchases for the month. Agency and Treasury issues were very popular, equities sold off for a 3rd consecutive month. Private foreign investors did most of the buying.
The Mortgage Bankers Association reported that its weekly mortgage index gained 1.6%. Purchase apps advanced .3% refi’s jumped 3.7%. the 30-year jumbo loan rate increased to 4.77%
Housing starts advanced 9.2% in August to 1.282 million units annualized on a huge gain in multi-family construction. Single family construction activity was also strong in the western region. Permits slipped 5.7% to 1.229 million units annualized.
The current account deficit fell to 101.5 billion in the second quarter, slightly below consensus and a 10-month low. This is the last quarter of data prior to the imposition of tariffs that will cause trade to drag on economic growth going forward. This trend will accelerate at the beginning of 2019 when tariffs jump to 25% unless change occurs.
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