Top Stories Last Week
• US Stocks Rallied Last Week
The US stocks rallied as the Fed Chair Janet Yellen in her testimony before the Senate indicated that the US economy softened and signaled the pace of tapering can be reconsidered if there is a significant change of economic outlook. Last week, S&P index rallied 1.2%, and MSCI EAFE index climbed 1.5%. However, the MSCI Emerging Market was down slightly 0.5%. Gold climbed 0.4%, and the SPGC commodity index rallied by 1.5%. The bond markets rose slightly. Barclays US Treasury index was higher by 0.6%, while US high yield bonds rose by 1.1%.
• US Durable Goods Excluding Transportation Rose 1.1% Unexpectedly
Orders for long-lasting manufactured goods excluding transportation unexpectedly rose last month as did a gauge of business spending plans, but that will probably not change views that factory activity is slowing. The durable goods orders excluding transportation rose 1.1%, the largest increase since May, after falling 1.9 percent in December. The increase last month reflected a surge in orders for computers and electronic products, fabricated metal products and defense capital goods. Outside these three components, details of the report were weak, with declines in orders for machinery, primary metals, electrical equipment, appliances and components, and transportation equipment.
• Fed Chair Janet Yellen Testified before the Senate
Federal Reserve Chair Janet Yellen, in her first appearance in the Senate, said the central bank is likely to keep trimming asset purchases, even as policy makers monitor data to determine if recent weakness in the economy is temporary. Yellen also signaled the Fed is moving away from its numerical threshold linking any decision to raise its benchmark interest rate to the level of unemployment. Yellen repeated the Fed’s statements that the central bank intends to reduce asset purchases at a “measured” pace, and she said in response to a separate question that the bond-buying program is likely to end in the fall. At the same time, “if there’s a significant change in the outlook, certainly we would be open to reconsidering.”
• US GDP Growth was Revised Down to an Annual Rate of 2.4%
The US real GDP grew at an annual rate of 2.4% in the fourth quarter of 2013. The second estimate is down 80 basis points from the 3.2% advance estimate BEA put out in January. The lowered fourth quarter estimate reflects smaller than previously estimated growth in personal consumption expenditures. There were also downward revisions to business investment in inventories and exports, as well as state and local government spending. These were partially offset by an upward revision to business fixed investment and inflation.
• Euro Zone Inflation Stabilized at an Annual Rate of 0.8%
Euro zone inflation stabilized in the European Central Bank’s “danger zone” in February but did not fall, making it less likely the ECB will loosen monetary policy further at its monthly meeting next week. European Union statistics office Eurostat estimated that consumer prices in the 18 countries sharing the euro rose an annual 0.8% this month. That was the same rate as in January and December, after readings of 0.9% in November and 0.7% in October.
Top Stories to Watch This Week
• US Employment Report
US employer may have added 160K jobs in January and unemployment is likely to stay at 6.6%.
• US Manufacturing Index
US manufacture sector is likely to expand, despite at lower pace.
• China Manufacturing Index
Chinese manufacturing activities are expected to continue expansion.
• ECB, BOE, RBA and BOC Monetary Policy Meetings
European Central Bank, Bank of England, Reserve Bank of Australia and Bank of Canada will meet this week to decide on monetary policies.