Author: Zac Martin, Investment Associate
Week Ending December 12th – Too Cold
FOMC Update: The FOMC announced a 25bps cut to the Federal Funds Rate, which was inline with expectations, the current bounds are now 3.5-3.75%. The major change within this release was not the change in rates, but rather, the change in the Fed’s stance regarding their balance sheet: “The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.” (FOMC Statement). Furthermore, the Fed announced they would begin by purchasing $60Bln in short term Treasury Bills and reinvestment of the roll-off of the Fed’s agency MBS. In addition to this announcement, the committee also released their Summary of Economic Projections for December. The median estimate for real GDP growth increased, while inflations expectations ticked down.
Employment Update: The Job Openings and Labor Turnover Survey for October reported a slight increase in job openings, 7,670K up from 7,658K. Additionally, the number of hires and quits continued to decline. The hires rate also continued its decline, reporting its lowest rate since 2013. Despite the decrease in hires and the employee quit rate, layoffs and the layoff rate remain relatively unchanged.
Business Optimism: Overall, the NFIB Small Business Optimism Index increased slightly for the November Report. On the positive side of the report, Earnings expectations, hiring plans and Sales expectations all increased slightly. Additionally, the most important problem for small business has become the Quality of Labor, which increased from the previous year.
The Week Ahead:
- Nonfarm Payrolls & Unemployment (12/16)
- Retail Sales (12/17)
- Consumer Price Index (12/18)
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