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In the News This Week

On the downside, after reaching a six-year high, small business sentiment weakened in June, as companies were less confident that the economy would improve in coming months. Six of the index’s ten indicators declined.

Wholesale inventories rose in May, driven by increases in metals, machinery, autos and lumber. The increase bodes well for economic growth in the second quarter, after a sharp decline in the pace of restocking contributed to the economy’s slump in the first quarter.

The release of the minutes from the June FOMC meeting revealed that Fed officials agreed to end their bond-buying program with a final $15 billion reduction at the October meeting, trimming purchases by $10 billion at each meeting till then. Some officials were concerned that investors are becoming too complacent about the outlook for the economy: “Signs of increased risk-taking were viewed by some participants as an indication that market participants were not factoring in sufficient uncertainty about the path of the economy and monetary policy”.

Bond buying has lifted the Fed’s balance sheet to a record $4.38 trillion.


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