Going into today, market consensus was for U.S. Q1 GDP growth to come in at a seasonally adjusted annualized rate of just 1.0%. The 0.2% announced was much worse, with implications for the Federal Reserve’s intent to move off the zero bound for short-term interest rates.
At its last meeting on March 18, the Federal Open Market Committee (FOMC) stopped saying that it can be “patient” in beginning to normalize interest rates. The Fed added that it was unlikely to boost its policy rate in April. As a result, few in the financial markets expect much of a change in the Fed’s policy statement after it meets this Wednesday. So what should investors expect?
Looking forward, the biggest risks to Australia’s economy are the over-levered consumer and the property market.
Apr 24, 2015
Although economic data have been mixed so far this year, we remain constructive on U.S. housing for five reasons.
Economic and Market Commentary
Now that much of the Bund yield curve has broken through zero, can Bund yields go even lower? Our sense is that the technical backdrop means that yields will hold these levels, and may go a little lower.
Ahead of the general elections in less than a month, the picture for the U.K. is one of economic health. As managing director and portfolio manager Mike Amey explains, despite some risk stemming from a possible political paralysis, the U.K. recovery is on a much sounder footing than during the last election in 2010 and is expected to stay its course.
Federal Reserve Chair Janet Yellen and her colleagues at the Fed have made it clear that in order to begin to normalize interest rates, U.S. inflation readings must, at the very least, not decline. Today’s data on March consumer prices meet this simple criteria.
As a result of increased demand, short-term government assets ‒ and the strategies that invest in them, namely 2a-7 money market funds ‒ will likely continue to offer little compensation (yield) to investors even as the Fed starts to recalibrate rates higher.
The European Central Bank is done with major policy surprises for the foreseeable future. There is no substance to recent market talk of ECB tapering in light of improved macro data.
With complete production data being quite lagged, many analysts are relying on the market’s experience in 2012, when natural gas rigs dropped sharply but natural gas production still managed modest growth.