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Bob Carey
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  US Economy and Credit Markets Week Ended Mar. 21, 2014
Posted Under: Weekly Market Commentary
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Bond yields rose for the week ended March 21 and prices fell as the Federal Reserve discussed the possibility of a rate increase six months after the end of quantitative easing. Using this timetable, rates could increase as early as next spring. Last week's economic reports led-off strongly on Monday as Industrial Production rose .5% in February beating the consensus estimated gain of .2%. The auto sector was particularly strong in February. Tuesday's reports were mixed as the CPI rose .1% even as energy prices fell .5% and Feb housing starts declined .2% on an annual basis, in line with estimates. The March Federal Reserve meeting held on Wednesday reduced QE's pace by $10B to a rate of $55B in Treasury and MBS purchases per month ($30B and $25B respectively). The Federal Reserve left the discount rate unchanged but decided to no longer use a 6.5% unemployment rate as an explicit metric for potentially raising the discount rate. Rather, the Fed will reference a wide range of data focusing on "sufficient underlying strength in the broader economy." The Feb leading index rose .5% vs. an expected .2% signaling an expected quickening pace of economic growth. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: March Consumer Confidence Index (78.5), Feb New Home Sales (445,000, -23,000); Wednesday: MBA Mortgage Applications, Feb Durable Goods Orders (.8%, +1.8%); Thursday: GDP Annualized QoQ (2.7%), Prior Week Initial Jobless Claims (325,000, +5,000); Friday: Personal Income (.3%), Personal Spending (.3%) and University of Michigan Confidence (80.5).

Posted on Monday, March 24, 2014 @ 8:37 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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