U.S. Outlook: The pause that refreshes?

Posted By Scott Anderson In Economic Outlook | No Comments

In this week’s U.S. Outlook report, I consider the Fed’s continuing asset purchases and what it could mean for your finances.

Below is a brief summary followed by a link to the full report, delivered on Nov. 1, 2013.

Key observations:
  • Since September Fed meeting, mortgage rates have dropped by about a half a percentage point.
  • Economic and inflation data will not prompt FOMC to reduce asset purchases before March 2014.
  • The market now expects 2 rate hikes by late 2015, bringing the Fed funds rate to only around 0.75 percent by December 2015.
  • October FOMC statement indicates Fed sees the recent declines in long-term bond yields removing much of the longer-term downside risks to the economy and housing market.
  • October FOMC statement suggests the Fed sees the government shutdown impact as not worth a mention from a longer-term economic outlook perspective.
  • Mortgage Bankers Association data through Oct. 25 shows purchase and refi applications may have bottomed-out.
  • October ADP employment data shows small and medium size employers cut back September hiring, foreshadowing weak October payroll report next Friday.
  • We are expecting 120K net new non-farm jobs for October versus consensus of 125K.
  • The Fed’s long-term inflation objectives are not being met.
  • Producer price inflation at 0.3 percent over the last 12 months is at its lowest level since 2009.
  • If inflation remains at current low levels, the Fed may need to scale up monthly asset purchases.

mortgage_rate_110113 [1]

To read my remarks in full, check out this week’s US Outlook Report [2].

Article printed from Bank of the West: https://changematters.bankofthewest.com

URL to article: https://changematters.bankofthewest.com/2013/11/01/the-pause-that-refreshes/

URLs in this post:

[1] Image: http://blog.bankofthewest.com/wp-content/uploads/2013/11/mortgage_rate_110113.png

[2] this week’s US Outlook Report: https://cdn.shoutlet.com/file/10476/954298.pdf

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