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Weekly Market Update – July 10, 2015

Markets surged worldwide Friday on hopes of a Greek settlement.  The Dow finished 211 points higher, ending the week up .2%.  For the year the index is now down .3%.

On Friday, Greece Prime Minister Alexis Tsipras offered a bailout proposal that will be reviewed by international creditors before Sunday’s deadline.  If the deal is accepted, Greece will receive its necessary bailout funds, alleviating pressure on its banking system and strengthening its membership in the Eurozone.  It is expected that an agreement will be reached.  In China, markets rose for a second day (up 4.6% after Thursday’s 5.8% surge) after Beijing promised additional regulatory support. 

The yield on the 10-year Treasury rose 12 bps to 2.42%, up 3 bps for the week and now up 25 bps for the year, pressuring fixed income prices.

Oil rose 7 cents to $52.85 Friday despite a report by the International Energy Agency that warned of a global slowdown in demand for oil.  Per the IEA’s report, slower growth in demand for oil combined with at or near record levels of supplies in the US, Russia and the Middle East may drive oil prices lower.  Other destabilizing events such as the lifting of sanctions on Iran, which would lead to an increase in exports of Iranian crude, or a Greek Eurozone exit, which could depress oil demand throughout Europe, have the potential to also negatively affect oil prices.       

Next week’s economic calendar highlights include June retail sales on Tuesday, inflation data on Wednesday and Friday, weekly jobless claims on Thursday and June housing data on Friday.  Expect retail sales to slow from May, inflation to remain in check, weekly jobless claims to fall in the 280-290,000 range (from 297,000 this week) and the housing data to show an increase in activity from May.  Also of note, second quarter earnings will begin in earnest next week while Janet Yellen, Fed Chairwoman, will speak before Congress on Wednesday and Thursday.  Yellen’s comments will be parsed for clues as to the timing of the Fed’s first interest rate hike, generally expected to occur in September or December. 

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Ulland Investment Advisors

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