French Manufacturing Sentiment Drops, US Mortgage Applications Jump

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French Manufacturing Sentiment Drops, US Mortgage Applications JumpFrench factory confidence touched a 13-month low in August, indicating that economic recovery remains a tall order.

The French national statistics office reported that its manufacturing confidence index fell to 96, the weakest level since July 2013, compared with 97 in July. Another business-sentiment index also fell.

The latest pointer of French economic weakness comes just after President Francois Hollande deals with a cabinet mutiny over austerity measures. Recent data showed that the economy stagnated in the first two quarters, while a survey published last week indicated that manufacturing shrank for the fourth straight month in August.

Hollande and Prime Minister Manuel Valls reshuffled three ministers after Economy Minister Arnaud Montebourg was recently fired after criticizing the government’s deficit cut, saying it is inflexible and is spurring unemployment.

Meanwhile, U.S. home mortgage applications surged last week as demand for both home purchase loans and refinancing rose. The Mortgage Bankers Association revealed that its index of mortgage application, which tracks both home purchase loans and refinancing applications, grew 2.8 percent in the week through Aug. 22.

The MBA’s index of refinancing applications grew 2.8 percent while that of home loan requests, a strong indicator of future home sales, jumped 2.6 percent.

The fixed 30-year mortgage rates stood at 4.28 percent on average through the week, a drop of one basis point from the previous week. The MBA survey tracks at least 75 percent of all U.S. retail home mortgage applications, reported Reuters.

Elsewhere, an index of UK inflation expectations touched its lowest level in 19 months after the country’s Debt Management Office sold $1.5 billion (900 million pounds) of index-linked gilts that mature in 2040. The 30-year break-even rate, which measures inflation expectations, touched low of 3.253 percentage points.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com