Clarksville, TN – Real GDP rose at a 3.2% annual rate in the advance estimate for 4Q13, about as expected, but the details were a bit surprising. Consumer spending and business fixed investment, the key components, each rose at a respectable pace.
However, inventory growth, already elevated in 3Q13, rose further (and will likely subtract from GDP growth in 1H14). Net exports (a smaller trade deficit) added. Residential home building and government subtracted. Personal income figures rose meagerly in 4Q13, suggesting that we may see some slowing in spending ahead.The Fed lowered the monthly pace of asset purchases by another $10 billion (to $65 billion, vs. $75 billion in January and $85 billion in 2013). The tapering of asset purchases is “not on a preset path,” according to the Fed, but officials expect to make further reductions “in measured steps” as the economy improves.
The busy economic calendar did not distract U.S. market participants from worries about emerging economies. The stock market was choppy. Bond yields fell.
Next week, the ISM manufacturing data may set the early tone, although investors are expected to keep an eye on emerging market developments. The employment report is always important for the financial markets, but there’s a lot of uncertainty heading on the January release.
Seasonal adjustment is a bit tricky and can magnify any weather effects. We’ll get annual benchmark revisions to the payroll data, which will include a correction in the methodology (shifting about 469,000 workers from private households, not included in the establishment survey, into healthcare services).
Extended unemployment benefits expired for 1.35 million at the end of 2013. Some of these people may give up looking for a job, reducing labor force participation and the unemployment rate.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.648||1.580|
|Dollars per Euro||1.355||1.357|
|Japanese Yen per Dollar||102.790||91.070|
|Canadian Dollars per Dollar||1.117||1.002|
|Mexican Peso per Dollar||13.337||12.734|
|10-year municipal (TEY)||4.48||4.52|
Treasury Yield Curve – 01/31/2014
S&P Sector Performance (YTD) – 01/31/2014
|Janet Yellen sworn in as Fed chair|
|ISM Manufacturing Index (January)
Motor Vehicle Sales (January)
|ADP Payroll Estimate (January)
ISM Non-Manufacturing Index (January)
|Jobless Claims (week ending February 1st)
Trade Balance (December)
|Employment Report (January)|
|Retail Sales (January)|
|Presidents Day Holiday (markets closed)|
|FOMC Policy Decision, Yellen Press Briefing|
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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 January 30th, 2013.