Tuesday | March 4, 2014
- In a week devoid of headline labor market data or a major central bank decision, the Treasury curve bull flattened. Over last week, 3-, 5-, and 10-yr yields dropped 3, 3, and 8 bps, respectively. Meanwhile, US equities continued to push higher after a pullback in January; the S&P 500 closed at an all-time high 1,859, Friday.
- Ukraine dominated headlines late in the week. Over the weekend, approximately 6,000 Russian troops took control of Ukraine's Crimea region after Russian President Putin received parliamentary endorsement to deploy forces.
- Fed Chairwoman Yellen delivered the semi-annual testimony to the Senate Banking Committee Thursday. She maintained that the central bank will continue to reduce QE unless the economy slows.
- Economic data last week was generally more upbeat. The S&P / Case-Shiller Home Price Index showed a 0.76% increase for December, ahead of estimates. Durable Goods Orders declined less than expectations and New Home Sales jumped 9.6% m/m for January, and as expected, Q4 GDP was revised downward to 2.4% q/q from 3.2%.
- Economic data will be front and center this week, headlined by the February Employment Report. Expectations are for 150k nonfarm jobs added last month and the Unemployment Rate to hold at 6.6%.
- Aside from the labor market, January PCE, increased 1.2% m/m (est. +1.1%). The 1.2% y/y increase is still well below the Fed's stated 2.0% target. The inflation rate may begin to garner more attention from the Fed now that the Unemployment Rate is near the 6.5% threshold.
- Market participants will continue to monitor the tensions between Russia and Ukraine. The Russian currency has devalued to an all-time low versus the dollar prompting the central bank to hike the benchmark interest rate by 150 bps.
The information represented herein was obtained from various sources, which we believe to be reliable. Neither the information presented nor opinions expressed constitutes an offer to buy or sell any security. And it is not intended to guide the investor on which securities to buy, or when to buy or sell.