Clarksville, TN – The economic data surprised. Real GDP rose at a stronger-than-expected 2.8% annual rate in the advance estimate for 3Q13, but the figure was boosted by faster growth in inventories (which added 0.8 percentage point to GDP growth).
Consumer spending rose at a 1.5% annual rate, while business fixed investment rose 1.6% – nothing to write home about. The partial government shutdown had a mixed impact on the October employment figures.
Nonfarm payrolls rose by 204,000 (median forecast: +125,000), while August and September figures were revised a net +60,000.The unemployment rate edged up to 7.3%, but the Bureau of Labor Statistics indicated that many of the furloughed federal workers (who should have been recorded as “unemployed, on temporary layoff”) were misclassified (as “employed but absent from work”). Labor force participation fell sharply, but should rebound in the data for November.
The surprising strength in nonfarm payrolls puts a Fed tapering back in play for December. The Fed’s decision will be data-dependent. There will be one more employment report (due December 6th) before the December 17th-18th Federal Open Market Committee meeting. Note that the PCE Price Index, the Fed’s chief inflation gauge, rose 0.1% in September (+0.9% y/y), up 0.1% (+0.059% before rounding, +1.2% y/y), trending well below the Fed’s 2% goal. Low inflation was one factor in the Fed’s September decision to delay the tapering.
Next week, the economic calendar thins out somewhat. September trade figures could lead to some minor revisions to the 3Q13 GDP growth estimate. Industrial production is likely to have remained on a lackluster trend in October, mixed across industries. Janet Yellen is not expected to face much opposition in her nomination hearing. However, investors will listen for any clues pertinent to the tapering of asset purchases
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.608||1.598|
|Dollars per Euro||1.341||1.276|
|Japanese Yen per Dollar||98.510||79.910|
|Canadian Dollars per Dollar||1.045||0.997|
|Mexican Peso per Dollar||13.204||13.053|
|10-year municipal (TEY)||4.31||4.34|
Treasury Yield Curve – 11/08/2013
S&P Sector Performance (YTD) – 11/08/2013
|Veterans Day (bond market closed)|
|Import Prices (October)|
|Jobless Claims (seek ending November 9th)
Productivity (3Q13, preliminary)
Trade Balance (September)
Yellen Nomination Hearing (Senate Banking Committee)
|Empire State Manufacturing Index (November)
Industrial Production (October)
|Consumer Price Index (October)
Retail Sales (October)
FOMC Minutes (October 29th-30th)
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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 November 7th, 2013.