Week in Review: Last week presented a full slate of important economic data. Headline CPI and PPI, measures of price levels for consumers and producers respectively, fell in October. The headline CPI print for October was -0.1% set against 0.0% inflation expectations, and headline PPI fell -0.2% with similar 0.0% expectations. Core CPI and PPI numbers, which exclude volatile food and energy prices from the price basket, fared better with core CPI up +0.1% and core PPI up +0.2% in October. Weekly jobless claims of 323K were fewer than the 335K expected. Retail sales gained +0.4% in October but fell short of expectations with historically volatile auto sales removed, a disappointment evident in weak earnings releases from Target, Sears, and JC Penney. Fed Minutes from the October 29-30 meeting were released on Wednesday and highlighted that a policy change is imminent, should economic data continue to improve. In separate interviews on Friday, Atlanta Fed President Lockhart and Kansas City Fed President George both indicated that a reduction in monthly asset purchases would be on the table during the next policy meeting on December 17-18. Lockhart expects that even with a tapering in asset purchases, Fed policy will remain accommodative for years to come. Lockhart also believes that U.S. GDP growth will be stronger in 2014 than in 2013, a view shared by economists from Credit Suisse and Goldman Sachs who have 2.6% and 2.9% 2014 GDP targets respectively. In response to healthy, yet modest economic data releases and Fed news this week, U.S. equity markets showed humble gains. The S&P 500 was up +0.14% on the week, the Dow +0.25%, and the Russell 2000 +0.53%. Yield on the 10Y UST currently reads 2.75% (up from 2.69% a week earlier) and VIX retreated -1.29%. If you want to read the Fed minutes for yourself, check them out here: federalreserve.gov/monetarypolicy/files/fomcminutes20131030.pdf
Posted on: Sun, 24 Nov 2013 23:04:07 +0000
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