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Trade War Talk Fades

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The major averages enter the final hour with small losses on little real data as talk of the trade war and various diplomatic blunders fades into the background.

Foreigners remained willing to finance our deficits through May as the Treasury International Capital report showed net foreign purchases of 45.6 billion.  A 5th consecutive solid month, Treasury and Agency Bonds were popular, corporates to a lesser extent, while equities sold off substantially for the month.  Will see what happens with July’s data in a couple of months, but I have to think were in for a negative surprise given the circumstances.

The Beige Book on regional economic conditions showed more of the same for the period ending in July.  Modest to moderate economic activity and tight labor markets.  That said fears of higher prices, shortages and blowback from the trade war is certainly center stage, with more than a few comments on the subject.

The Philadelphia Fed regional index beat expectations in July with a 5.8-point gain to 25.7.  Strength was seen in new orders, employment data declined notably, price pressures rose and remain very high.

The California manufacturing survey slipped .3 points in the 3rd quarter to a still very strong 63.  Above 50 is expansion for this series, as with other regional indexes price pressures remain very high, with tight labor markets.

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