Economic Report: First Quarter 2013April 15, 2013 Posted by: Ninh Chung
The SVB Asset Management Quarterly Economic Book provides a comprehensive overview of global macro-economic and sector trends. Through statistical data and analysis, it helps our clients understand the market dynamics that impact their business. This quarter’s edition offers perspective on the Federal Reserve stance as well as detail on euro zone dynamics. Highlights from the economic report include:
The Fed has taken a strong stance that it will continue with quantitative easing until unemployment improves substantially with a 6.5% target and as long as inflation is contained below 2.5%.Growth continues to be anemic even though the Fed has aggressively pumped liquidity into the economy. Q4 GDP expanded at a dismal 0.4% due to cuts in defense spending and inventory.Employment has not accelerated for the last two years. There were 2.10M and 2.12M jobs added in 2011 and 2012, respectively, evidence of diminished returns of monetary policy.Average jobs added in Q1 totaled 148K and the unemployment rate at the end of Q1 was 7.6%. The lower rate was due to the lowest participation rate in over 30 years.Bond investors remain bullish as long-term yields remain relatively unchanged over the past year.The U.S. dollar has benefited from economy woes in Europe and the UK and the prospects of further easing by the BOJ. Ten-year yields have drifted from 1.76% at the end of December to 1.85% as of March 29, 2013.
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