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Fed revises rate projections higher: ours remain unchanged

The decision by the Fed this week to raise the Fed funds rate target range by 25bp to 0.5%-0.75% was widely expected. More surprisingly for the market was certainly the upward revisions in the (in)famous ‘dot plot’. The Federal Open Market Committee’s (FOMC) median forecast for Fed funds rates at the end of 2017 was […]

Healthy U.S. jobs report points to early rate hike

US non-farm payroll employment rose by a healthy 178,000 month-on-month (m-o-m) in November, in line with consensus expectations. Unexpectedly, the US unemployment rate fell further in November, to 4.6% from 4.9% in October, reaching its lowest level in more than nine years. At 4.6%, the US unemployment rate is now below the median rate of […]

U.S. growth to slow in H1 2017 before rising again in H2

US GDP growth was revised up from 2.9% to 3.2% for the third quarter. The main reason was a higher estimate of growth in consumer spending. Turning to Q4, economic data published so far have been mixed. Data on consumption in October were a bit disappointing. And advance estimates for the trade deficit and inventories […]

2017 growth forecast for U.S. remains unchanged for now

Figures released on November 15 show that core retail sales in the US rose by a strong 0.8% month over month in October, well above consensus expectations. Moreover, figures for the previous months were revised up. We believe consumer spending will grow by around 2.5% q-o-q annualised in Q4 (2.1% in Q3) and that it […]

Healthy payroll number in the U.S., strong increase in wages

October’s non-farm payroll figure was healthy, with upward revisions for the previous two months. The unemployment rate inched down and year-on-year (y-o-y) wage increases reached a fresh cyclical high. The latest data tend to strengthen the case for a Fed hike in December. Non-farm payroll employment in the US rose by 161,000 m-o-m in October, […]

ISM indices point to healthy U.S. growth in October

The ISM Manufacturing index increased modestly in October, to 51.9 from 51.5 in September, slightly above consensus expectations (51.7). However, following a sharp increase to 57.1 in September, the Non-manufacturing index fell back to 54.8 in October, below consensus expectations (56.0). The rebound in the ISM manufacturing index over the past two months confirmed that […]

Modest changes in latest Fed statement

As widely expected, the Federal Open Market Committee (FOMC) remained on hold at its policy meeting on November 2 and there were only slight modifications in the FOMC statement. The Fed modestly upgraded its assessment of inflation and provided further hints of a December rate rise, saying that the case for a hike “has continued […]

Core US inflation should rise only modestly

  Core US personal consumption expenditure (PCE) inflation remained stable at 1.7% year on year (y-o-y) in September, in line with consensus expectations. We continue to believe that core PCE inflation will pick up modestly over the coming months. Our forecast that it will reach 1.9% y-o-y by year-end and 2.1% in December 2017 remains […]

Strong U.S. GDP report conceals softness of some components

On the back of a temporary surge in exports, real US GDP grew by a strong 2.9% in Q3, above consensus expectations. Our yearly average forecasts that US GDP will grow by 1.5% in 2016 and 2.0% in 2017 remain unchanged. The robust rate of expansion in Q3 needs to put in proper context. First, […]

Soft U.S. retail data conceals healthy consumer spending

Core retail sales in the U.S. rose by ‘only’ 0.1% month on month ( m-o-m) in September, below consensus expectations. Moreover, the July number was revised down. The result was that core retail sales were almost flat (+0.3% quarter on quarter (q-o-q) annualised in Q3), much lower than the 6.9% rise seen in Q2. Nevertheless, […]

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