US GDP (Q2) to be Released on the 20/07/2014! Even if data this week shows a mediocre rebound in US economic growth, that might be enough to keep the stock market aloft at record highs and the Federal Reserve steadfast in its winding down of stimulus through bond purchases. The forecast is to have grown 3.2%. Growth had shrunk 2.9% (Q1) due to a harsh winter and spending cuts tied to the federal Affordable Care Act. Still, some lackluster recent data on housing and capital spending, plus a mixed bag of Q.2 earnings, have raised the risk that even a moderate GDP bounce may fall short of expectations. Fridays disappointing report on durable goods orders in June spurred JPMorgan and Goldman Sachs to shave their second-quarter outlook by 0.1% point to 2.6% % 3.0% growth, respectively. Recent geo-political anxiety over conflict in Ukraine and Middle East has somewhat kept a lid on stock prices, it has not spooked investors enough to prompt them to dump equities for bonds and cash. The Standard & Poors 500 index fell 0.4% on Friday after closing at a record high of 1987.98 on Thursday, while benchmark 10-year Treasuries yield was little changed on the week @ 2.48%. There has been steady improvement on the job front. Domestic jobless claims in the latest week fell to their lowest since early 2006, while monthly jobs gains have jumped by more than 200,000 in each of past five months, a level of strength last seen in the late 1990s. While more Americans have returned to work, Federal Reserve Chair Janet Yellen told two Congressional panels earlier this month she remained worried about stagnant wage growth and a low inflation rate that is below the Feds 2% target. Those concerns have supported a notion that the Fed is in no hurry to move away from its near-zero interest rate policy. On Friday, U.S. short-term interest rate futures implied that traders priced in a 53 percent chance of a Fed rate hike in June 2015 and a 75% chance of such a move a month later. The Federal Open Market Committee, the Feds policy-setting group, is scheduled to announce whether it will further pare its bond purchases - currently @ $35 billion a month. Compiled by:- Kgomotso Mohajane
Posted on: Mon, 28 Jul 2014 08:57:40 +0000
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