LSA Connect

Economic Update 6-12-2017

• Economic data for the week was very light, and limited to a slight pareback in non-manufacturing growth and continued low readings for jobless claims.
• Equities performed negatively around the world last week, especially in the U.S. technology sector, reversing recent strength.  Bonds also suffered as interest rates ticked upward and foreign bonds were held back by a stronger dollar.  Commodities declined as oil prices again fell due to oversupply concerns.

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Fed Note:

The May Fed meeting was a ‘minor’ one, with no press conference or economic projections, so was not considered to be one with a high probability of action.  This ended up being the case, with the Fed Funds rate being maintained at 0.75-1.00%, per the bump higher in March.  The formal statement acknowledged that the labor market has continued to strengthen, despite a slowing in economic activity.

With conditions holding steady, many economists are seeing the odds of another rate hike in June at better than 50%, with those chances remaining data dependent, as usual.  Aside from growth and labor market information received between now and then, the fiscal situation in Washington remains a wildcard, with any success in pro-business legislation likely providing a boost to broader economic growth and risk asset markets perhaps, while inaction could keep pushing out the timeframes for these catalysts.  Progress has been slower than expected, which could partially be due to the personalities involved and partially due to Washington business as usual.

The dashboard of Fed items is little changed from March:

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