6.28.13 Week in Review

US Durable Goods orders rose by 3.6% versus the forecast 3.0% and consumer confidence for June was rated as 81.4 vs the previous month of 74.3. Durable goods sales represent the purchase of items that are expected to last more than three years and usually represent large expenditures with the consumer. The rise in durable goods coincides with the increase in consumer confidence for the month of June, showing the slowly improving economic situation in the United States. The previous month also showed an increase of 3.6% in durable goods, but the consumer confidence was at a lower score of 74.3. As a survey, analysts find fault in the consumer confidence due to the volatility that comes from the pooling size and the short time frame (6 months).

Latvia joins the Euro and Croatia joins the European Union in a sign of strength for a union that just a couple of years ago people were saying wouldn't last. Latvia has more promising economic numbers than some EU members, but is seeking to join the currency that it is already economically pegged to, but doesn't reap the benefits of. "Latvia’s entry into the euro zone should also trigger upgrades from ratings agencies" says Mohammed Kazmi, an emerging markets strategy analyst at RBS. Moody's said that joining the EU would support the country's positive rating by lowering the exposure to risk events. Croatia's President, Ivo Josipovic, stated his intentions moving forwards were not purely economic, as Croatia has been in an economic downtrend for the past five years. Rather he sees it "primarily as a peace project, and then a common market and economy," the president added. "That's the reason we are supporting our neighbors as well to join the EU." Croatia will officially become a member state on July 1st.

The savior of the EU continued to post improving economic data as German unemployment decreased by 12,000, bringing in a lower than forecast unemployment figure of 6.8%. “The jump in May was something of a distortion, so there should be a correction” said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. “The labor market as a whole is doing well, considering the significant economic slowdown over the winter.” The return of economic strength in the EU's largest economy is a potential sign of strength and stability as the EU struggles to get out of the longest recession in the union's history. On the other side, German year over year Consumer Price Index came in slightly more than forecast at 1.8% which, although an incremental change, is a reminder that not all of the data is moving in the right direction. The increase in CPI could potentially lead to a rate change by the ECB, but it would rely on more increases in CPI than just that of Germany.