- The Federal Reserve may begin tapering its monthly asset purchases of $120 billion later this year
- Corporate buybacks are up 49% over last year
- Existing home sales rose 2% in July from the prior month
Top Three Market Headlines
Fed Chairman Signals Policy Plans: In a virtual symposium last Friday, Federal Reserve Chairman Jerome Powell stated that the Fed could begin tapering its monthly asset purchases of $120 billion later this year. While acknowledging that the Delta variant of Covid-19 poses a short-term risk, Mr. Powell noted that the employment landscape has improved in recent months. At the same time, he clarified that the central bank likely wouldn't begin raising interest rates until a later date. In addition, the Chairman echoed his comments from the Fed's late-July meeting that recent inflation numbers should prove transitory.
Corporate Buybacks on the Rise: Keyed by recovering profits, swelling cash balances, and access to cheap financing, corporate stock buybacks in 2021 are up 49% versus last year, according to data from Bank of America Securities. Financial firms have led the charge of late, recently posting their highest level of weekly buybacks since 2010 and registering the largest dollar amount of buybacks among different sectors so far this year. Banks, in particular, have been active acquirers of their own shares after being freed from buyback restrictions the Federal Reserve imposed in the beginning stages of the pandemic.
Home Sales Tick Up in July: The declining rate of home sales that began in late 2020 amid rapidly escalating prices and dwindling inventory appears to have leveled off, according to data released last week. The National Association of Realtors (NAR) reported that existing home sales rose 2% in July. This was the second straight monthly increase, though at 5,990 the level of sales remained well below the recent cycle high of 6,730 in October, 2020. New home sales, meanwhile, increased for the first time in four months, inching up 1% from June, according to the U.S. Census Bureau. After a prolonged decline, inventory levels have finally begun to pick up, with total housing inventory at the end of July standing 7.3% higher than the prior month, though still down 12.0% from the prior year, according to the NAR.