CHART OF THE WEEK

 

 

In December 2012 (left-side chart), the Federal Reserve (Fed) anticipated interest rates would be 4% today, while financial markets were more pessimistic and predicted interest rates would be less than 1% (blue area). The financial market forecast was relatively accurate as interest rates actually evolved (red area) fairly close to what the market anticipated in September 2012.

 

As of September 2016 (right-side chart), the Fed now believes interest rates will be 3% by 2020; financial markets anticipate just over 1%. Rising interest rates can be a signal of improved economic conditions.

 

Although the financial markets’ estimates for future growth remain bleak, the situation following the election indicated a marked improvement. The longer-run measure of expected interest rates (5 Year Treasury yield) increased substantially from 1.20% (September 21) to 1.49% (November 9).

LAST WEEK

News & Commentary Weekly Highlights:

• Bloomberg: Cuba's Glum Economic Forecast (Saturday)
• Economist: King of debt (Saturday)
• Wall Street Journal: Donald Trump to Meet Monday [today] With Potential Picks for Top Financial Policy Jobs (Friday)
• Barron’s: November Fed Minutes Leave Little Doubt About December Hike (Wednesday)
• Weekly Standard: Putting Obamacare Out of Its Misery (Monday)

 

Top Economic Indicator Highlights:

• New Residential Sales (October 2016)
  • Single-family home sales (seasonally adjusted annual rates)
    • Oct.: 563,000; Sep.: 574,000; Aug.: 567,000
• Median sales price of new homes
  • Oct.: $304,500; Sep.: $314,100; Aug.: $299,600
• Noteworthy: The Census Bureau announced that September’s single-family home sales were revised downward from the initial estimate of 593,000 to 574,000.  October’s estimate of home sales represented a 1.9% decrease from September’s revised data. The October 2016 number is up 17.8% from October 2015.

 

THIS WEEK

Upcoming Economic Data

• Monday
  • Dallas Fed Manufacturing Survey (10:30am)
• Tuesday
  • Gross Domestic Product (Second Estimate) (8:30am)
  • Consumer Confidence Index (10:00am)
  • Dallas Fed Texas Retail Outlook Survey (10:30am)
• Wednesday
  • ADP National Employment Report (8:15am)
  • Personal Income/PCE Deflator (8:30am)
  • Chicago Purchasing Managers Index (9:45am)
  • Pending Home Sales (10:00am)
  • Consumer Credit Panel (11:00am)
  • Federal Reserve Board of Governors Beige Book (2:00pm)
• Thursday
  • Jobless Claims (8:30am)
  • ISM Manufacturing (10:00am)
  • Motor Vehicle Sales (4:00pm)
• Friday
  • Employment Situation (8:30am)
  • Construction (10:00am)