April 13, 2014
Clarksville, TN – The economic calendar was relatively thin. The Producer Price Index rose more than expected in March, reflecting a pickup in services (which had fallen in February). Details continue to suggest limited inflation pressure in the pipeline.
The Job Openings and Labor Turnover Survey data continued to suggest a large amount of slack in the job market (hiring rates and quit rates are trending flat, still low by historical standards). The IMF slightly lowered its forecast for global growth this year and next, with larger downward shifts in the outlook for Russia and Brazil.
April 6, 2014
Clarksville, TN – The data remained consistent with a continued economic recovery. However, it’s unclear how much of the improvement is simply a rebound from bad weather and how much is underlying strength.
The monthly ISM surveys were mixed. Motor vehicle sales rebounded sharply in March (suggesting that bad weather postponed sales, just as we saw with the government shutdown in October). The March Employment Report was close to expectations.
April 3, 2014
Clarksville, TN – The economic data reports were mixed and mostly ignored by the financial markets. Real GDP rose at a 2.6% annual rate in the 3rd estimate for 4Q13 (vs. +2.4% in the second estimate and +3.2% in the advance estimate).
Most of the story remained that same. Government subtracted a full percentage point from overall growth, but that was offset by a narrower trade deficit (which added a percentage point).
March 24, 2014
Clarksville, TN – Financial market participants seemed to care little about Putin’s annexation of Crimea, but freaked out following a Yellen comment taken out of context. An upside surprise in the Philadelphia Fed Index help restore positive sentiment in equities.
As was widely expected, the Federal Open Market Committee tapered the monthly pace of asset purchases by another $10 billion (to $55 billion beginning in April).
March 16, 2014
Clarksville, TN – Next week, the focus will be on the Fed’s policy decision and Janet Yellen’s first press briefing as Fed chair. The Federal Open Market Committee is expected to taper the monthly pace of asset purchases by another $10 billion (to $55 billion).
Policymakers are also expected to tweak the language of the forward guidance (the Fed’s conditional commitment to keep the overnight lending rate exceptionally low). Specifically, we can expect the FOMC to discard the 6.5% unemployment rate threshold.
March 9, 2014
Clarksville, TN – There was plenty of fresh economic data, but most of it was distorted by the weather (which can have different effects depending on which areas of the country get hit).
Nonfarm payrolls rose by 175,000 in the initial estimate for February (median forecast: +150,000, although market participants were likely braced for about +130,000). Figures for December and January were revised a net 25,000 higher.
March 2, 2014
Clarksville, TN – There were relatively few surprises in the economic data reports. Real GDP rose at a 2.5% annual rate in the 2nd estimate for 4Q13 (vs. +3.2% in the advance estimate).
Consumer spending was not as strong as estimated earlier, but was still respectable (a +2.6% pace, vs. +3.3%). Business fixed investment was revised higher (+7.3%, vs. +3.8%).
February 23, 2014
Clarksville, TN – Poor weather continued to have an impact on the economic data. Residential construction and existing home sales fell more than anticipated in January. However, financial market participants seemed to be more willing to dismiss bad economic numbers (as being due to the weather) – U.S. markets also ignored turmoil in the Ukraine.
The CPI rose modestly in January, continuing a low trend. The new and improved Producer Price Report suggested relatively modest pipeline inflation pressures.
February 16, 2014
Clarksville, TN – In her first monetary policy testimony to Congress, Fed Chair Janet Yellen appeared calm, confident, and in charge.
She pledged continuity in monetary policy and regulatory reform. While “not on a preset path,” the monthly pace of asset purchases will likely be reduced “in further measured steps at future meetings” (which is widely interpreted as -$10 billion per Fed policy meeting).
February 9, 2014
Clarksville, TN – The January Employment Report was a mixed bag. Nonfarm payrolls rose by a less-than-expected 113,000 (vs. a median forecast of +185,000), following a subpar 75,000 gain in December.
However, seasonal adjustment and weather effects added uncertainty to the results. Details suggest that the weather may not have been much worse than a normal January, but December weather was more unfavorable.