Clarksville, TN – The FOMC minutes from the April 26th-27th policy meeting showed that “most [meeting] participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.”
However, “participants expressed a range of views about the likelihood that incoming information would make it appropriate to adjust the stance of policy at the time of the next meeting.”In other words, a majority of Fed officials believe that a June rate hike would be appropriate under certain conditions, but officials differed in their views of whether those conditions would be met. The minutes served to jolt the financial markets out of their complacency, which held that the Fed might not raise rates at all this year.
As expected, the economic data reports remained consistent with a pickup in economic growth in 2Q16. Some of that likely reflects seasonal adjustment issues related to the early Easter. The Consumer Price Index reflected higher gasoline prices in April, while core inflation remained low.
Industrial production figures reflected a return to more normal temperatures (higher output of utilities) and a rebound in auto production. Ex autos, manufacturing output appears to be trending about flat (mixed across industries).
Next week, the economic calendar thins out somewhat, with a number of second-tier reports for April. The focus may be on the GDP figure, which is expected to be revised higher (+0.5% in the advance estimate).
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.461||1.551|
|Dollars per Euro||1.120||1.115|
|Japanese Yen per Dollar||109.96||120.69|
|Canadian Dollars per Dollar||1.309||1.223|
|Mexican Peso per Dollar||18.424||15.185|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||2.42||2.57|
Treasury Yield Curve – 05/20/2016
As of close of business 05/19/2016
|May 24||—||New Home Sales (April)|
|May 25||—||Advance Trade in Goods (April)|
|May 26||—||Jobless Claimes (week ending May 21)
Durable Goods Orders (April)
Pending Home Sales Index (April)
|May 27||—||Real GDP (1Q16 2nd estimate)
UM Consumer Sentiment (May)
|May 30||—||Memorial Day Holiday (markets closed)|
|May 31||—||CB Consumer Confidence (May)|
|June 1||—||ISM Manufacturing Index (May)
Fed Beige Book
Auto Sales (May)
|June 2||—||ADP Payroll Estimate|
|June 3||—||Employment Report (May)
ISM Non-Manufacturing Index (May)
|June 15||—||FOMC Policy Decision (Yellen press conference)|
|June 23||—||UK referendum vote on EU Membership|
|July 27||—||FOMC Policy Decision (no press conference)|
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Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
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 May 19th, 2016.