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Market Brief – Wednesday 7/29/20

Stocks nudged higher in overnight trading and rose in early trading as equity investors hope for more candy from today’s FOMC press conference to support their risk-taking decisions. Treasury yields were flat in overnight trading and without a QE auction scheduled for today, may see sellers attempt to push yields higher in late trading.

Mortgage applications fell -0.8% last week as purchase applications fell -1.5% and refinance applications fell -0.4%.

Preliminary wholesale inventories fell -2.0% in July and retail inventories excluding autos fell -0.8% in June. Declining inventories are negative for economic growth however inventory drawdowns are positive for future growth once they bottom.

Pending home sales rose +16.6% in June and +12.7% from this time last year as consumers race to buy homes during a global pandemic due to record low interest rates.

The Department of Energy reported crude oil inventories as Crude: -10-612mm (+357k expected), Cushing: +1.309mm (+426k expected), Gasoline: +654k (-733k expected), Distillates: +503k (-267k expected). Crude oil rose following the report.

Stocks closed higher despite Fed Chair Powell making no changes to the Fed’s monetary policy except an extension of some of its emergency dollar lending programs until March 31, 2021. Treasury yields, after rising most of the day, fell following the FOMC press conference where Fed Chair Powell stated the Coronavirus shutdown was deflationary. Treasury yields closed slightly higher on the day.