U.S. mortgage rates decline
Rates on an average 30-year mortgage fell to 6.47% in the week ended Aug. 21 from 6.52% the week before, Freddie Mac said. The 15-year fixed-rate mortgage fell to 6%, down from 6.07%, while the 5-year adjustable rate dipped to 5.99% from 6.02%. The 1-year adjustable rate rose to 5.29%. Mortgage yields, though dipping in recent weeks, are much higher than they were in the spring. Home loan applications are at a 71/2-year low, the Mortgage Bankers Assoc. said Wed.
U.S. commercial paper holdings grew by $40.5 bil in the week ended Wed., the Fed said. Asset-backed commercial paper rose $25.4 bil, ending a 3-week slide. Corporations rely on short-term borrowing, but the market has struggled in the yearlong credit crunch. Euro zone activity slide stabilizes
Business activity in the euro zone unexpectedly stabilized at weak levels in Aug. while the plunge in crude oil eased inflationary pressure, bolstering the view that interest rates will stay on hold for now. Flash Eurozone PMI data from RBS/Markit still pointed to an ongoing deterioration in business and jobs and depict an economy in clear decline from recent boom times. Bleaker data for the 15-member bloc's top 2 economies, Germany and France, kept alive fears of a euro zone recession this year.
The euro zone's purchasing managers index lost 0.1 point 14 Aug. to 48.2, the lowest since June '03 but better than forecasts. The jobs index hit a 4-year low. The manufacturing and overall PMIs rose, but from multiyear lows. Price pressures eased, with indexes for input costs and prices charged falling. July U.K. retail sales rose 0.8%
That defied expectations for a 0.3% drop in sales volumes, calling into question the scale and speed of the consumer slowdown. Data have been volatile -- sales rose a record 3.9% in May, followed by June's record 4.3% fall. July sales rose 2.1% vs. a year earlier, the smallest gain since Feb. '06. Meanwhile, retail prices rose 1.6% vs. a year earlier, the most since May '98. Food inflation surged to 6.2%, a 16-year high. Traders scaled back bets on quick Bank of England rate cuts.
