Clarksville, TN – As expected, the Federal Open Market Committee did not alter the pace of asset purchases (currently $85 billion per month). The FOMC noted that “the recovery in the housing sector slowed somewhat in recent months,” but removed the phrase (from the September 18th statement that “the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market.”
That suggests that the Fed could still begin to taper the pace of asset purchases at the December policy meeting if the economic data between now and then are strong enough (although that’s not seen as likely).The economic data remained consistent with a moderate pace of growth and a continued low trend in inflation. Industrial production rose 0.6% in September, but that reflects cooler than normal temperatures. Manufacturing output edged up just 0.1% (+2.8% y/y), a disappointing 1.2% annual rate in 3Q13.
Retail sales edged down 0.1%, reflecting a drop in auto sales (up 0.4% otherwise). The ISM Manufacturing Index was stronger than expected in October, with strong breadth of improvement, but comments from supply managers were mixed.
Next week, two key reports arrive. The advance GDP estimate is always an adventure, as the government is missing some of the components and will have to make assumptions. The financial markets typically focus on the headline figure, which is expected to be relatively lackluster in 3Q13, but the details are what’s important.
Due to the way the data is collected, the partial government shutdown is likely to have a limited impact on the October nonfarm payroll figures, but should boost the unemployment rate significantly. The Bureau of Labor Statistics will provide some estimate of the impact from the shutdown.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.605||1.613|
|Dollars per Euro||1.360||1.297|
|Japanese Yen per Dollar||98.310||79.850|
|Canadian Dollars per Dollar||1.043||1.000|
|Mexican Peso per Dollar||13.027||13.077|
|10-year municipal (TEY)||4.26||4.37|
Treasury Yield Curve – 11/01/2013
S&P Sector Performance (YTD) – 11/01/2013
|Factory Orders (August, September)|
|ISM Non-Manufacturing Index (October)|
|Leading Economic Indicators (September)|
|Jobless Claims (week ending November 2nd)
Real GDP (3Q13, advance estimate)
|Employment Report (October)
Personal Income and Spending (September)
|Veterans Day (bond market closed)|
|Industrial Production (October)|
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The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business October 31st, 2013.