28 Oct 2005

Posted at 16:26h in The Friday Brief by
The rear-view mirror shows the economy continued to expand in the third quarter.  US Gross Domestic Product increased to a 3.8% annual rate, more than predicted, despite higher energy prices, rising interest rates, and two devastating hurricanes.  Consumer purchases of automobiles and slower growth in imports contributed to the increase.  Housing was also a significant contributor, but it is slowing.  Residential fixed investment grew 8.9% in the third quarter, down from 10.9% in the previous quarter.  Federal government spending went up 7.7% in the third quarter, significantly higher than the 2.4% growth in each of the previous two quarters.  

22 Jul 2005

Posted at 15:05h in The Friday Brief by
Back in February of this year Mr. Greenspan labeled the unusual condition of falling long-term rates and steadily rising short-term rates, a ‘conundrum’.  The rates generally move in parallel.  Yesterday, he told the Congress that the reason long-term bond yields have continued to fall while short-term rates have tripled over the past year was that global savings exceeded investment, inflation expectations are low, and the world economy is stable.  He also debunked the theory that an inverted yield curve signaled an economic slowdown, calling it a “misconception.”  He said “the quality of that signal has been declining in the last decade, in fact, quite measurably.” 

22 Apr 2005

Posted at 16:44h in The Friday Brief by
Will higher oil prices finally cause inflation in the U.S. economy?  Will the Federal Reserve be forced to raise their benchmark rates faster and risk stalling the economy?  These are the questions on the minds of investors and traders of stocks and bonds alike.  Recent indicators released by the government this week had opposite and dramatic effects on the markets.  The Producer Price Index released Tuesday showed that prices held steady for the month of March at the manufacturer’s level.  The S&P 500 index was up .6% and the bond markets rallied substantially as well. 

30 Jul 2004

Posted at 16:13h in The Friday Brief by
The U.S. economy slowed to a 3% rate in the second quarter according to the government report just released.  The slower than expected growth was the result of rising energy prices and the weakest pace of consumer spending in three years.  Consumer spending which represents 70% of the economy increased only 1% after rising 4.1% during the first three months of the year.  The slowdown in GDP follows an upwardly revised 4.5% growth rate for the first quarter.  The bond market responded favorably to the news as the inflation pressures fall with slower growth.