Market Action

• Wall Street saw one of its most dramatic and volatile weeks since the financial crisis. After opening Monday down 1,000 points the Dow Jones Industrial Average surged back to post a gain of over 1% this week led by Energy and Technology.
• While U.S. markets were able to recover from a poor start, the selling in China was persistent. Net capital outflows continue to plague the country’s markets and tighten monetary conditions, prompting the PBOC to lower interest rates and the reserve requirement this week.
• As China deteriorates prospects for Europe seem to be improving. Germany and Spain both posted stronger than expected GDP numbers for Q2 while the ECB reported robust growth in its money supply. UBS raised their expectations for growth in Europe for the rest of 2015 in a note released this week.
• Ukraine reached an agreement with creditors on a reduction in the face value of its debt burden. The deal will write off 20% of Ukraine’s debt and allow it to meet three upcoming repayment deadlines.
• The U.S. grew at a brisk rate of 3.7% according to a revised release of Q2 data. The GDP data affirmed the improving fundamental state of the economy amidst the turnover in asset markets this week. Both market volatility and the improving fundamentals are on the minds of Fed officials as they ponder a rate increase in the coming weeks.
• Japan reported weak inflation and household spending figures for the month of July. The Bank of Japan remains confident in the current policy measures to rejuvenate the economy despite the recent lethargic pace.
• Brazil reported that the economy shrank 1.9% in the second quarter. The figure marks the biggest decline since 2009. The downturn in China along with corporate and government corruption continues to plague Brazil, which is at risk of losing its investment grade status according to reports.

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