Weekly Economic Briefings - Us Weekly Economic Briefing
The plunge in the ISM manufacturing survey along with Apple’s sales warning stoked concerns that cracks are now appearing in the macro foundations. Though turmoil and intense risk-off trading in financial markets have increased downside risks to the economy, the underlying fundamentals supporting the economy remain solid – as illustrated by the stellar December jobs report. The economy and the Fed both sent reassuring signals to markets Friday. Following a bumpy week, investors took comfort from the strong jobs numbers, which confirmed that the economy ended 2018 on solid footing, and from Powell’s dovish comments, which emphasized a patient and flexible policy approach in response to the more volatile market and political environment. Barring further tightening in financial conditions that would negatively impact economic activity, the very strong labor market picture support our expectation that the Fed will keep a tightening bias in 2019. However, we look for the Fed to pause until May 1, when we expect the first of two total rate hikes this year.
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