December Payrolls in the 5 Largest States Were Weak
On Tuesday the BLS will release the December State employment data. We study these data to assess whether there was any unusual payroll behavior among the individual states that may be reverse in the following month. A number of the individual states release data for their state a day or two in advance of the full BLS release. We look at these individual state releases in advance of the BLS release for the largest states (California, Texas, New York, Florida, and Illinois). Collectively these 5 states account for a little over 36% of national payrolls. Collectively these 5 states were very weak in December suffering a loss of 3,300 jobs.
Fed Monetary Policy Survey - Less Uncertainty in Spite of Risks
SMRA surveyed our readers about the outlook for monetary policy with seven brief questions. The survey took place during the period of Tuesday, January 17 through Friday, January 20. Our survey suggested that uncertainty about the outlook has receded in many respects. This is not to say that the outlook does not have its uncertainties, but that survey respondents are in broad agreement about what these might be. Expectations have settled behind a series of gradual rate hikes of the sort that Fed officials have been projecting. The risks to the outlook are also lining up with ones mentioned by policymakers.
Fixed Income Focus: Awaiting New Administration...ACA Repeal Hits Roadblocks
Treasury yields were mostly higher this past week as the curve steepened.
The Affordable Care Act (ACA) repeal effort has encountered some obstacles, including a new CBO report, pushback from key Republican Senators, resistance from Republican governors, and some shift in public opinion about the ACA. President Trump's position on health care is also at odds with other Republicans, which could be a wild card. Any delay in repealing the ACA also complicates the process for enacting other fiscal measures, including broader individual and corporate tax cuts.
Fixed Income Focus
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.
Changes in the Fed's Reinvestment Policies--When?
The recent talk of changing the reinvestment policy in the not too distant future is not unreasonable. Earlier we were of the opinion that the FOMC would be patient in pulling the trigger on reinvestment policy. In other words, we were guessing that the Funds target might have a lower bound of 2% or so before a change would be announced, probably in 2018. We now think it could come sooner, probably sometime late in 2017.
Federal Reserve Research