US Economic Chartbooks
Please see our Economic Week Ahead Chartbook for a discussion of next week's economic releases provided in a visually friendly format that includes graphs, brief descriptions of SMR's forecasts, and links to detailed data previews. If you missed anything from last week, see our Economic Week in Review Chartbook for a look back at the releases with links to full analyses.
Trading Today - Import prices, housing starts, U of M
Wrapping up the week in the U.S., we will get the January import price index and housing starts figures at the open this morning, followed by the mid-morning February University of Michigan data.
Fed rate hikes -- four now in view
We now look for the Fed to tighten interest rates four times this year, up from our prior forecast of three hikes, absent large market turbulence that could temper the amount of rate increase. The recently passed Bipartisan Budget Act of 2018 is a significant new development on the fiscal front that greatly boosts GDP growth in 2018 and 2019. The extra fiscal spending stimulus boosts growth another 0.25 percentage points (pp), in addition to the 0.4 pp coming from tax cuts in 2018. That helps place real GDP growth near 3% in 2018. In 2019 growth looks to be boosted 0.5 pp to 2.5% and the unemployment rate falling to 3.5% by year-end 2018.
Congress passes another trillion dollars in fiscal stimulus
Congress passed a sweeping spending bill this morning that boosts discretionary spending by $300 billion and provides $90 billion in disaster relief. The Bipartisan Budget Act would boost the deficit by $320 billion over the next 10 years, with the budget shortfall breaching the symbolic $1 trillion-mark next year - the largest deficit since the Great Recession.
Fixed Income Focus: Risk-off flows dominate through steady Refunding
he Treasury market price action this week was dominated by the ebbs and flows of the risk-off trades in response to the large selloff in global equities, although the long-end of the Treasury curve lagged through the Refunding auctions.
There was generally good demand for this week's 3-year, 10-year, and 30-year Refunding auctions, particularly when considering the $4.0 billion increase in the size of the Refunding package. Buyside demand was average overall, which also isn't bad considering the recent acceleration in the Treasury market selloff prior to this week's volatility.
Fixed Income Focus