March 13th, 2015
Economic Data Releases:
Weekly Market Action:
After a major move up in Treasury yields following the February jobs report, the Treasury market regained all lost ground last week. Credit spreads increased as recent economic data highlights a slowdown in GDP growth in Q1. The Atlanta Fed now estimates QQ1 GDP will be 0.6% as frigid weather and L.A.'s port shutdown have caused havoc with economic data (see chart 1.)
All eyes will be on the Fed this week, as they are widely expected to drop the "patient" language in their statement indicating that they can raise rates at any point, depending on the data of course! The labor market is no longer the Fed's focus as they prepare to raise rates; strength there has been proven. The recent slowdown in inflation, which the 1.0% Core PPI print adds to the on-hold argument, may keep the Fed from moving in June (see chart 2). The key question is whether or not this recent slowdown is transitory - maybe we will gain some clarity from the Fed on the matter this week.
Upcoming Economic Data Releases: