PPI Rises 0.2% - The producer price index (PPI) rose 0.2% in May, after seasonal adjustments, with higher energy prices offsetting a drop in food prices, according to the Labor Department. The core PPI, which excludes food and energy prices, fell 0.1%. Despite the tick up in May, the PPI has dropped 5% in the past year, the biggest year-over-year decline since August 1949, the government said. This could be seen as a deflationary spiral, but the core producer price index has gained 3% over the past year.
May Housing Starts Rise 17% - U.S. housing starts rebounded nicely in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April to a postwar low, the Commerce Department estimated Tuesday. The surprising increase was led by a 62% gain in new construction of multifamily dwellings. Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November. Building permits rose 4% in May to a seasonally adjusted annual rate of 518,000. Permits for single-family homes rose 7.9% to a 408,000 annual rate, the highest since November.
Industrial Production Falls 1.1% - U.S. industrial output fell 1.1% in May, led by big drops in motor vehicles, mining and high-technology products, the Federal Reserve reported Tuesday. Output is down 13.4% in the past year, the largest year-over-year decline since 1946. In manufacturing, capacity utilization fell to a record-low 65%.
Morgan Stanley to Repay TARP - Morgan Stanley is expected on Wednesday to begin repaying billions of dollars in bailout funds received from the U.S. Treasury, CNBC reported Tuesday, citing an unidentified person familiar with the situation. Last week Morgan Stanley said it was among ten major banks which would be allowed to repay loans they received from the TARP. The firm received $10 billion under the program.
Fed Purchases $6.45 Billion of Treasurys - The Federal Reserve Bank bought $6.45 billion in Treasurys maturing between 2012 and 2103 Tuesday morning, the first of two operations this week. Dealers offered $31.316 billion to be purchased. Traders expected the central bank to buy between $6 billion and $7 billion, in line with past purchases in this maturity range. The buyback is the latest in the central bank's attempts to keep a lid on borrowing costs, though mortgage rates have jumped significantly in the last few weeks in spite of the Fed's efforts. After the buyback, Treasurys stayed lower, pressured by better-than-expected inflation and housing starts data.
Articles
Moral Hazard and the Crisis - Paul A. Volcker to a meeting of the International Institute of Finance in Beijing, June 11 - The Wall Street Journal - "Volcker: Hedge funds don't need to be regulated like banks."
You Be Obama - By David Brooks - The New York Times - "Let’s say that you are President Obama. You’ve inherited a health care system that is the insane spawn of a team of evil geniuses from an alien power. Pay is divorced from performance. Users are separated from costs. Rising costs threaten to destroy your nation and everything you hold dear."
A plan to boost America’s fiscal health - By Peter Orszag, Director of the White House Office of Management and Budget - Financial Times - "As the healthcare debate picks up in the US, there has been much discussion about how to pay for it. Coinciding with this debate are vocal concerns about the country’s underlying fiscal position – which some have suggested as a reason to delay healthcare reform." *** Note - If FT.com asks you to register, you can do so for free.
May Housing Starts Rise 17% - U.S. housing starts rebounded nicely in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April to a postwar low, the Commerce Department estimated Tuesday. The surprising increase was led by a 62% gain in new construction of multifamily dwellings. Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November. Building permits rose 4% in May to a seasonally adjusted annual rate of 518,000. Permits for single-family homes rose 7.9% to a 408,000 annual rate, the highest since November.
Industrial Production Falls 1.1% - U.S. industrial output fell 1.1% in May, led by big drops in motor vehicles, mining and high-technology products, the Federal Reserve reported Tuesday. Output is down 13.4% in the past year, the largest year-over-year decline since 1946. In manufacturing, capacity utilization fell to a record-low 65%.
Morgan Stanley to Repay TARP - Morgan Stanley is expected on Wednesday to begin repaying billions of dollars in bailout funds received from the U.S. Treasury, CNBC reported Tuesday, citing an unidentified person familiar with the situation. Last week Morgan Stanley said it was among ten major banks which would be allowed to repay loans they received from the TARP. The firm received $10 billion under the program.
Fed Purchases $6.45 Billion of Treasurys - The Federal Reserve Bank bought $6.45 billion in Treasurys maturing between 2012 and 2103 Tuesday morning, the first of two operations this week. Dealers offered $31.316 billion to be purchased. Traders expected the central bank to buy between $6 billion and $7 billion, in line with past purchases in this maturity range. The buyback is the latest in the central bank's attempts to keep a lid on borrowing costs, though mortgage rates have jumped significantly in the last few weeks in spite of the Fed's efforts. After the buyback, Treasurys stayed lower, pressured by better-than-expected inflation and housing starts data.
Articles
Moral Hazard and the Crisis - Paul A. Volcker to a meeting of the International Institute of Finance in Beijing, June 11 - The Wall Street Journal - "Volcker: Hedge funds don't need to be regulated like banks."
You Be Obama - By David Brooks - The New York Times - "Let’s say that you are President Obama. You’ve inherited a health care system that is the insane spawn of a team of evil geniuses from an alien power. Pay is divorced from performance. Users are separated from costs. Rising costs threaten to destroy your nation and everything you hold dear."
A plan to boost America’s fiscal health - By Peter Orszag, Director of the White House Office of Management and Budget - Financial Times - "As the healthcare debate picks up in the US, there has been much discussion about how to pay for it. Coinciding with this debate are vocal concerns about the country’s underlying fiscal position – which some have suggested as a reason to delay healthcare reform." *** Note - If FT.com asks you to register, you can do so for free.
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