- Net Foreign Security Purchases for July rose to $87.4B versus estimates of $60.0B and $80.9B in June.
- Preliminary Univ. of Mich. Consumer Confidence for September fell to 76.9 versus estimates of 85.0 and 89.1 in August.
BOTTOM LINE: The US current-account deficit narrowed last quarter for the first time since 2003, Bloomberg reported. The deficit accounted for 6.3% of GDP, down from a record 6.5% in the first quarter. I expect the current-account deficit to improve again during 3Q.
International investors increased their net holding of US assets by $87.4 billion in July, suggesting their optimism for the world’s largest economy. The increase in net holdings of Treasury notes, corporate bonds, stocks and other financial assets was the fourth straight, the first time that’s happened since 1985, Bloomberg reported. I expect foreign demand for US assets to remain strong over the coming months.
US consumer confidence fell to the lowest since 1992 after Hurricane Katrina devastated the Gulf Coast and pushed gasoline prices to a record high, raising concern that Americans may curtail spending, Bloomberg said. The current conditions component of the index fell to 97.7 from 108.2 last month. The expectations component of the index fell to 63.6 from 76.9. The severe decline in confidence should have been expected after Katrina. I expect confidence to remain depressed next month before rebounding into year-end.
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