http://forums.technicalwatch.com - Fundamentally Speaking 60 Fri, 10 Sep 2010 03:07:24 GMT http://forums.technicalwatch.com/post?id=4870859 <span style="font: 11px arial;">The U.S. Monster Employment Index recorded its seventh consecutive month of positive year-over-year growth rate at 12 percent. The annual growth rate eased from July possibly due to moderation in underlying job market drivers. The Index dropped two points (1 percent) in August as online job demand eased contrary to seasonal patterns traditionally witnessed at this time of the year.<br><br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.com. <br><br> During August, online job availability rose in 6 of the Indexs 20 industry sectors and in 5 of the 23 occupational categories monitored. Index results for the past 13 months are as follows: <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">Aug. 10</span></td> <td><span style="font: 11px arial;">Ju1. 10</span></td> <td><span style="font: 11px arial;">Jun. 10</span></td> <td><span style="font: 11px arial;">May 10</span></td> <td><span style="font: 11px arial;">Apr. 10</span></td> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">136</span></td> <td><span style="font: 11px arial;">138</span></td> <td><span style="font: 11px arial;">141</span></td> <td><span style="font: 11px arial;">134</span></td> <td><span style="font: 11px arial;">133</span></td> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">While the Monster Employment Index experienced a marginal contraction in August, several industries, occupations and all 28 metro markets including Cleveland and Detroit continue to record positive annual growth trends, said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. The fact that the rate of annual growth has eased from July suggests that employers continued cautious outlook is informing their short term hiring activity. <br><br> <strong>Utilities and Mining Register Large Increases On Monthly and Annual Basis; Manufacturing, and Transportation And Warehousing Slowdown Year-Over-Year</strong> <br> Online recruitment activity rose in six of the 20 industries between July and August. Compared to year-ago levels, 17 industries are showing positive growth trends, although at decelerated rates from July.<br><br> Among the industries, health care and social assistance maintained steady recruitment levels, in-line with seasonal patterns and was one of the few sectors to see annual growth rate accelerate from 16 percent in July to 19 percent in August. <br><br> Meanwhile, mining, quarrying, oil and gas extraction continued to record strong online demand for jobs in August and remained a top trending sector with the highest annual growth rate in the Index (56 percent). Similar recruitment trends were witnessed in the utilities industry, which saw its annual growth rate edge up from 23 percent in July to 26 percent in August mostly due to increased demand for specialized workers related to infrastructure replacement/upgrades. <br><br> In contrast, manufacturing; and transportation and warehousing registered some slowdown in annual growth rates between July and August. Arts, entertainment, and recreation registered the most notable reduction in demand among industries in the Index, with annual growth dropping from +14 percent in July to -7 percent in August, again pointing to an undercurrent of economic uncertainty affecting hiring decisions in a traditionally strong period of recruitment activity. Meanwhile, accommodation and food services edged up 3 points on the month to reflect a weaker than average seasonal rise. <br> <br> <strong>Protective Service; and Legal Occupations Register Largest Gains in August; Healthcare and Community and Social Service Occupations Continue To Grow Year-Over-Year</strong> <br> Overall online demand for workers rose in five and remained flat in four of the 23 occupational categories in August while twenty of the 23 categories are exhibiting positive annual growth rates.<br> <br> Among occupations, protective services, legal and installation/maintenance recorded the largest monthly increases in online job availability on a monthly basis. Year-over-year sector demand trends remained strongest for healthcare support (up 20 percent), with abundant opportunities for assorted assistant and technician positions. Healthcare practitioners; and community and social services also noted improvement in long-term growth rates in the Index.<br> <br> In contrast, food preparation and serving; farming/ fishing; and military-specific occupations recorded monthly and yearly declines. <br><br> <strong>Online Job Availability Declines in Eight U.S. Census Bureau Regions in August; New York Records Highest Annual Growth amongst States </strong> <br> During August, demand contracted in eight of the nine U.S. Census Bureau regions. West South Central was the only region to note a marginal gain, but the gain fell short of seasonal expectations. South Atlantic noted the mildest deceleration in annual growth rate from July to August. Middle Atlantic continued to lead all regions in year-over-year.<br><br> Among the 50 states and the District, 5 registered increased online job opportunities in August, while 5 were unchanged from July levels. New York was again the top state by measure of annual growth in the Index. Annual growth rate turned negative for Louisiana, Montana, Mississippi, District of Columbia, and West Virginia. <br> <br> <strong>Twenty Two of 28 Major U.S. Metro Markets Monitored By The Index Rise in August</strong><br>During August, online recruitment activity rose in 22 of the 28 major metropolitan markets, monitored by the Index. Kansas City recorded the largest monthly growth, gaining six points (7 percent) in August. Transportation and material moving remained the markets fastest growing occupational category, with demand levels doubling what they were a year ago. Healthcare support; and business and financial operations also noted strong gains in demand in the month and annually. <br><br> Dallas registered a 4-point (4 percent) gain on the month, exceeding seasonal expectations. Portland gained 3 points on the month, short of its usual seasonal uptick for this time of year. Annual growth for the metro market in the Index slipped from 41 percent in July to 24 percent in August. Demand slipped notably for management; and life, physical, and social sciences. Nonetheless, annual growth remained positive for a majority of the occupational groups in the Portland market. To obtain a full copy of the Monster Employment Index report for August 2010, and to access current individual data charts for each of the 28 metro markets tracked, please visit <a target="_blank" href="mailbox:///C%7C/Documents%20and%20Settings/Owner/Application%20Data/Thunderbird/Profiles/7iotqt26.default/Mail/Local%20Folders/Inbox?number=686129556" http:="" about-monster.com="" employment-index=""><a href="http://about-monster.com/employment-index" target="_blank">http://about-monster.com/employment-index</a></a>. Data for the month of September 2010 will be released on October 7, 2010. </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4870859 Thur, 02 Sep 2010 13:07:59 GMT fib_1618 http://forums.technicalwatch.com/post?id=4868387 <p> <strong>Developments in Financial Markets and the Federal Reserve's Balance Sheet</strong><br> The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets during the period since the Committee met on June 22-23, 2010. He also reported on System open market operations during the intermeeting period, noting that the Desk at the Federal Reserve Bank of New York had engaged in coupon swap transactions in agency mortgage-backed securities (MBS) to substantially reduce the number of the Committee's earlier agency MBS purchases that remained to be settled. In addition, the Manager briefed the Committee on the System's progress in developing tools for possible future reserve draining operations. The Federal Reserve successfully conducted two more small-value auctions of term deposits to confirm operational readiness for such auctions at the Federal Reserve and at the depository institutions that chose to participate. The Manager noted that the staff was developing plans for additional small-value tests of the Term Deposit Facility. In early August, the Federal Reserve successfully executed a few small-value term reverse repurchase operations, including the first the Federal Reserve conducted using agency MBS as collateral, to ensure operational readiness for such transactions at the Federal Reserve, the clearing banks, and the primary dealers. There were no open market operations in foreign currencies for the System's account over the intermeeting period. By unanimous vote, the Committee ratified the Desk's transactions over the intermeeting period. </p> <p> The Manager also noted the staff's projection that, if mortgage rates were to remain near their levels at the time of the meeting, repayments of principal on the agency MBS held in the SOMA likely would reduce the face value of those holdings by roughly $340 billion from August 2010 through the end of 2011. The level of repayments would be expected to increase further if mortgage rates were to decline from those levels. In addition, about $55 billion of agency debt held in the SOMA portfolio would mature over the same time frame. </p> <p> <strong>Staff Review of the Economic Situation</strong><br> The information reviewed at the August 10 meeting indicated that the pace of the economic recovery slowed in recent months and that inflation remained subdued. In addition, revised data for 2007 through 2009 from the Bureau of Economic Analysis showed that the recent recession was deeper than previously thought, and, as a result, the level of real gross domestic product (GDP) at the end of 2009 was noticeably lower than estimated earlier. Private employment increased slowly in June and July, and industrial production was little changed in June after a large increase in May. Consumer spending continued to rise at a modest rate in June, and business outlays for equipment and software moved up further. However, housing activity dropped back, and nonresidential construction remained weak. Additionally, the trade deficit widened sharply in May. A further decline in energy prices and unchanged prices for core goods and services led to a fall in headline consumer prices in June. </p> <p> Private nonfarm employment expanded slowly in recent months. The average monthly gain in private payroll employment during the three months ending in July was small, considerably less than the average increase over the preceding three months. However, average weekly hours of all employees continued to recover. The net addition of jobs in manufacturing and related industries, and in nonbusiness services such as health and education, continued to contribute importantly to the net increase in private employment. Employment in construction and financial activities fell further. The unemployment rate moved down in June from its level earlier in the year, and was unchanged in July, as declining civilian employment was accompanied by decreases in labor force participation. Initial claims for unemployment insurance remained at an elevated level over the intermeeting period. </p> <p> Industrial production was little changed in June after three months of strong increases. The output of utilities was boosted by unseasonably hot weather while manufacturing production declined. The drop in manufacturing output included a reduction in motor vehicle assemblies, but they were scheduled to increase noticeably in July. The June decrease in factory output also reflected weaker production in industries producing non-automotive consumer goods and construction and business supplies. The output of high-technology items and other business equipment continued to rise. Capacity utilization in manufacturing in June stood well above its mid-2009 low, but it was still substantially short of its longer-run average. </p> <p> Revised data indicated that consumer spending fell more sharply in 2008 and in the first half of 2009, and subsequently recovered more slowly, than previously estimated. Real personal consumption expenditures (PCE) rose gradually during the second quarter. Sales of light motor vehicles continued to move up, on balance, with the level of sales in July slightly higher than the second-quarter average. Real disposable personal income increased at a noticeably stronger pace than spending in recent months, and the personal saving rate moved up further from the upwardly revised level reported in the revisions to the national income and product accounts. Indicators of household net worth--such as stock prices and house prices--were little changed, on net, over the intermeeting period. Consumer confidence fell back in July, with households expressing greater concern about their personal finances and the outlook for the recovery. </p> <p> The housing market, which had been supported earlier in the year by activity associated with the homebuyer tax credits, was quite soft for a second consecutive month in June. Sales of new single-family homes rebounded some in June after their sharp drop in May, but they remained at a depressed level. Sales of existing homes fell for a second month in June, and the index of pending home sales suggested another decline in July. Starts of new single-family houses, which had dropped steeply in May, edged down in June to the lowest level since the spring of 2009. The low number of new permits issued in June appeared to signal that little improvement in new homebuilding was likely in July. House prices were largely stable, on balance, in recent months. The interest rate on 30-year fixed-rate conforming mortgages fell further during July, reaching a record low for the 39-year history of the series. </p> <p> Real business spending on equipment and software rose strongly again in the second quarter, with increases widespread across the categories of spending. New orders for nondefense capital goods excluding aircraft remained on a solid uptrend, although their three-month change for the period ending in June was less rapid than earlier in the year. Survey indicators of business conditions and sentiment softened in July but remained consistent with further gains in production and capital spending in the near term. Business investment in nonresidential structures turned up in the second quarter, with spending boosted by the rise in outlays for drilling and mining structures. The decline in spending for other types of nonresidential buildings appeared to be slowing, and there were a few signs that financial conditions in commercial real estate markets, though still difficult, were stabilizing. In the second quarter, businesses appeared to add to inventories at a faster rate. However, ratios of inventories to sales for most industries did not point to any sizable overhangs. </p> <p> Inflation remained subdued in recent months. Headline consumer prices declined in May and June because of sizable drops in consumer energy prices. At the same time, the core PCE price index moved up only slightly, and the year-over-year increase in the index in June was lower than earlier in the year. In recent months, prices of core consumer goods continued to decline while prices of non-energy services rose moderately. At earlier stages of production, producer prices of core intermediate materials fell back in June; in contrast, most indexes of spot commodity prices moved up during July. Inflation compensation based on Treasury inflation-protected securities moved down further over the intermeeting period, partly in response to softer-than-expected data on economic activity, but survey measures of short- and long-term inflation expectations were largely stable. </p> <p> Nominal hourly labor compensation--as measured by compensation per hour in the nonfarm business sector and the employment cost index--rose modestly during the year ending in the second quarter. Average hourly earnings of all employees rose slowly over the 12 months ending in July. Output per hour in the nonfarm business sector declined in the second quarter after rising rapidly in the preceding three quarters. On net, unit labor costs remained well below their level one year earlier. </p> <p> The U.S. international trade deficit widened sharply in May, as a significant increase in exports was more than offset by a surge in imports. The corresponding decline in real net exports made a significant negative contribution to U.S. GDP growth in the second quarter. The increase in exports was broadly based, with particular strength in exports of capital equipment. Imports of capital goods also were strong, as were imports of consumer goods and automotive products. In contrast, imports of petroleum products fell in May, held back by both lower prices and reduced volumes. </p> <p> Available data suggested that aggregate GDP growth in foreign economies remained strong in the second quarter. Recent indicators of economic activity for the euro area showed little imprint of the fiscal stresses that emerged in the spring. Industrial production continued to grow in May, with particularly solid gains in Germany and France, and purchasing managers indexes and economic sentiment turned up in July. In Japan, exports continued to support economic growth, even as indicators of household spending remained weak. Machinery orders declined in May, however, and industrial production moved down in June, suggesting some deceleration in economic activity. In the emerging market economies (EMEs), incoming data generally pointed to a moderation of economic growth, albeit to a still-solid pace, with a notable slowing in China in the second quarter. In other EMEs, purchasing managers indexes generally still pointed to expansions in manufacturing activity, though industrial production in many countries began to decelerate. In contrast, Mexican indicators suggested that economic activity rebounded in the second quarter after contracting in the first quarter. Headline inflation rates generally declined abroad, reflecting prior declines in oil and other commodity prices. </p> <p> <strong>Staff Review of the Financial Situation</strong><br> The decision taken by the Federal Open Market Committee (FOMC) at its June meeting to maintain the 0 to 1/4 percent target range for the federal funds rate was about in line with investor expectations and elicited little market reaction; the same was true of the wording of the accompanying statement. Over the intermeeting period, investors appeared to mark down the path for monetary policy in response to weaker-than-expected economic data releases and Federal Reserve communications that were read as suggesting that policymakers' concerns about the economic outlook had increased. </p> <p> Reflecting the same factors, yields on nominal Treasury coupon securities fell noticeably on net. Treasury auctions were generally well received, with bid-to-cover ratios mostly exceeding historical averages. Yields on investment- and speculative-grade corporate bonds decreased, and their spreads relative to yields on comparable-maturity Treasury securities declined moderately. Secondary-market bid prices on syndicated leveraged loans rose a bit, while bid-asked spreads in that market edged down. </p> <p> Conditions in short-term funding markets improved somewhat over the intermeeting period. Spreads of term London interbank offered rates (Libor) over rates on overnight index swaps moved down at most horizons, and liquidity in term funding markets reportedly increased. Spreads on unsecured commercial paper were little changed. In secured funding markets, spreads on asset-backed commercial paper moved down, while rates and haircuts on collateral for repurchase agreements involving Treasury and agency collateral held steady. </p> <p> Broad U.S. equity price indexes increased slightly, on net, as generally positive corporate earnings news and an easing of investors' worries about the potential effects of fiscal strains in Europe were partly offset by concerns about the strength of the economic recovery. Most firms in the S&amp;P 500 reported second-quarter earnings that exceeded analysts' forecasts. Option-implied volatility on the S&amp;P 500 index declined but remained somewhat elevated by historical standards. The spread between the staff's estimate of the expected real return on equities over the next 10 years and an estimate of the expected real return on a 10-year Treasury note--a rough measure of the equity risk premium--was little changed at an elevated level. Financial stock prices moved about in line with broader indexes, and credit default swap spreads for large financial institutions narrowed moderately. </p> <p> Gross bond issuance by U.S. investment-grade nonfinancial corporations rebounded in July from relatively subdued levels in May and June. Nonfinancial commercial paper outstanding also increased. Issuance of syndicated leveraged loans rose in the second quarter, but terms on such deals reportedly tightened somewhat. Measures of the credit quality of nonfinancial firms remained solid. Gross equity issuance was moderate in June and July. </p> <p> Prices of commercial real estate appeared to have increased in the second quarter, though the number of transactions was small. Nonetheless, commercial real estate markets remained under pressure. Delinquency rates for securitized commercial mortgages continued to rise in June, and commercial mortgage debt was estimated to have contracted by a sizable amount again in the second quarter. However, investor demand for high-quality commercial mortgage-backed securities (CMBS) reportedly was robust, although issuance of CMBS remained muted. </p> <p> Consumer credit contracted again in the second quarter, as revolving credit continued to decline and nonrevolving credit edged down. Issuance of consumer asset-backed securities slowed a bit in July, reflecting, in part, typical seasonal patterns. Consumer credit quality continued to show improvement. Delinquency and charge-off rates for most types of consumer loans moved down in recent months, although these rates remained elevated. Spreads of credit card interest rates over those on Treasury securities stayed elevated in May, while interest rate spreads on auto loans remained near their average level over the past decade. </p> <p> Commercial banks' core loans--the sum of commercial and industrial (C&amp;I), real estate, and consumer loans--continued to contract in June and July. However, the recent runoff in core loans was appreciably smaller than the declines posted earlier in the year, reflecting a more modest contraction in C&amp;I loans. The July Senior Loan Officer Opinion Survey on Bank Lending Practices showed, for the second straight quarter, that a small net fraction of respondents had eased standards for C&amp;I loans over the previous three months. Commercial real estate loans continued to decline steeply in June and July, and residential real estate loans also decreased. Consumer loans at commercial banks were about flat, on balance, as reductions in credit card loans about offset an increase in nonrevolving consumer loans. Securities holdings by banks increased substantially in recent weeks. </p> <p> M2 was little changed in July after expanding slightly in the second quarter. Its subdued growth in recent months likely reflected a continued unwinding of earlier safe-haven flows as well as the very low rates of return on some components of M2, particularly small time deposits and retail money market mutual funds. </p> <p> In foreign exchange markets, the value of the dollar declined on balance over the intermeeting period, likely reflecting some reversal of flight-to-safety flows, better-than-expected European economic data, and the softer economic outlook for the United States. The release of the results of the European Union stress-test exercise, including data on European banks' exposures to sovereign debt, appeared to ease concerns about the potential for severe financial dislocations in Europe. Investors also seemed to take comfort from several oversubscribed auctions of government debt by Spain, Portugal, Ireland, and Greece. Accordingly, risk spreads on these governments' bonds, though elevated, generally declined, and European banks' access to dollar funding improved somewhat. The lack of any disruption to market functioning following the expiration, on July 1, of the European Central Bank's first one-year refinancing operation also supported investor sentiment. Market indicators of expectations for future overnight rates in the euro area shifted up during the period. No changes were made to policy interest rates in the euro area, the United Kingdom, or Japan. The Bank of Canada tightened policy a step further during the period, raising its target for the overnight rate 25 basis points to 3/4 percent. </p> <p> Notwithstanding the improved investor sentiment toward Europe, data releases pointing to lower-than-expected growth in economic activity in the United States and China may have weighed on global sovereign bond yields, which declined on net in Canada, Germany, the United Kingdom, and Japan. Equity prices, while up in Europe over the intermeeting period, were little changed in Canada and down in Japan. By contrast, share prices rose in emerging markets and flows into emerging market equity funds continued to be strong. The central banks of a number of EMEs, including Brazil, Chile, India, Malaysia, South Korea, Taiwan, and Thailand, increased policy interest rates. </p> <p> <strong>Staff Economic Outlook</strong><br> In the economic forecast prepared for the August FOMC meeting, the staff lowered its projection for the increase in real economic activity during the second half of 2010 but continued to anticipate a moderate strengthening of the expansion in 2011. The softer tone of incoming economic data suggested that the pace of the expansion would be slower over the near term than previously projected. Financial conditions, however, became somewhat more supportive of economic growth. Interest rates on Treasury securities, corporate bonds, and mortgages moved down further over the intermeeting period; the dollar reversed its April to June appreciation; and equity prices edged higher. Over the medium term, the recovery in economic activity was expected to receive support from accommodative monetary policy, further improvement in financial conditions, and greater household and business confidence. Over the forecast period, the increase in real GDP was projected to be sufficient to slowly reduce economic slack, although resource slack was still anticipated to remain quite elevated at the end of 2011. </p> <p> Overall inflation was projected to remain subdued over the next year and a half. The staff's forecasts for headline and core inflation in 2010 were revised up slightly in response to the higher prices of oil and other commodities and the depreciation of the dollar. Even so, the wide margin of economic slack was projected to contribute to some slowing in core inflation in 2011, though the extent of that slowing would be tempered by stable inflation expectations. </p> <p> <strong>Participants' Views on Current Conditions and the Economic Outlook</strong><br> In their discussion of the economic situation and outlook, meeting participants generally characterized the economic information received during the intermeeting period as indicating a slowing in the pace of recovery in output and employment in recent months. Real GDP growth was noticeably weaker in the second quarter of 2010 than most had anticipated, and monthly data suggested that the pace of recovery remained sluggish going into the third quarter. Private payrolls and consumer spending had risen less than expected. Business spending on equipment and software had increased strongly but reportedly was concentrated in replacements and upgrades that had been postponed during the economic downturn. Investment in nonresidential structures continued to be weak. Housing starts and sales remained at depressed levels, falling back after the expiration of the temporary homebuyer tax credits. The incoming data suggested that economic growth abroad had been somewhat stronger than anticipated and remained solid, boosting U.S. exports and supporting a pickup in U.S. manufacturing output and employment, though a surprising surge in imports in the second quarter widened the U.S. trade deficit. Conditions in financial markets had become somewhat more supportive of growth over the intermeeting period, in part reflecting perceptions of diminished risk of financial dislocations in Europe: Medium- and longer-term interest rates had fallen, some risk spreads had narrowed, and the decline in equity prices that had occurred in the months before the Committee's June meeting had been partly reversed. Moreover, participants saw some indications that credit conditions for households and smaller businesses were beginning to improve, albeit gradually. Thus, while they saw growth as likely to be more modest in the near term, participants continued to anticipate that growth would pick up in 2011. </p> <p> Revised national income and product account data showed that the contraction in aggregate output during the recent recession had been larger than previously reported. In particular, consumer spending had contracted more over the course of 2008 and the first half of 2009, and recovered less rapidly, than previously estimated, even as households' after-tax incomes had increased more than shown by the earlier data. In combination, these revisions indicated that the personal saving rate had been higher and had risen somewhat more during the past three years than previously thought. Participants recognized that the implications of these new data for the outlook were unclear. On the one hand, the revised data might indicate that households have made greater progress in repairing their balance sheets than had been realized, potentially allowing stronger growth in consumer spending as the recovery proceeds. On the other hand, the revised data might signify that households are seeking to raise their net worth more substantially than previously understood, or to build greater precautionary balances in what they perceive to be a more uncertain economic environment, with the result that growth in consumer spending could remain restrained for some time. </p> <p> Many participants noted that the protracted downturn in house prices and in residential investment seemed to have ended, although ups and downs in housing starts and home sales associated with the temporary tax credit for homebuyers made it difficult to be certain. A few commented that home sales and prices appeared to be edging up in their Districts. While recognizing that the housing sector likely had bottomed out, participants observed that large inventories of vacant and unsold homes, along with continuing foreclosures that would increase the number of houses for sale, likely would continue to damp residential construction, indicating that a sustained upturn from very low levels was not imminent. </p> <p> Business investment in equipment and software had grown at a robust pace, but growth in new orders for nondefense capital goods, though volatile from month to month, appeared to have stepped down. Many participants noted that capital investment was heavily concentrated in replacement investment and upgrades that firms had postponed during the economic downturn. A number of participants reported that business contacts again indicated that their uncertainty about the fiscal and regulatory environment made them reluctant to expand capacity. Other participants cited business surveys and reports from business contacts indicating that slow growth in sales and uncertainty about the strength and durability of the recovery likely were more important factors. Except in the extractive industries (drilling and mining), investment in nonresidential structures had continued to decline. The near-term outlook for commercial real estate investment remained weak despite a decline in vacancy rates in some markets. </p> <p> Participants agreed that credit conditions did not appear to be an important restraint on investment spending by larger firms that have access to the capital markets. Such firms were able to borrow readily and at relatively low rates; moreover, many businesses held substantial cash balances. In addition, survey results suggested that a sizable fraction of banks had eased loan terms, and a few had eased lending standards, on C&amp;I loans. Some participants observed that small businesses continued to find credit hard to obtain. However, several participants noted recent survey evidence indicating that most small firms that requested credit were able to borrow, and that relatively few small firms thought that access to credit was their most important problem. Standards for commercial real estate loans and residential mortgages remained very tight, and banks did not appear to be easing standards on such loans. Some limited easing of lending standards was noted for consumer loans, but credit availability remained a constraint and consumer credit continued to contract. However, several participants noted that with credit quality improving, some bankers were more actively seeking loan growth, though the same bankers also indicated that the demand for loans remained weak. </p> <p> Many participants noted that European countries' efforts to address their fiscal imbalances, and the release of the results of the stress test of European banks along with information about their exposures to sovereign debt, had reduced investor concern about downside risks in Europe. These factors appeared to have supported improvements in financial markets both here and abroad. Moreover, growth in Europe and Asia apparently remained solid, boosting U.S. exports. Nonetheless, a continuation of strong foreign growth would require a pickup in private demand abroad to offset a decline in policy stimulus and a smaller boost from inventory investment. Several participants noted that the same shift in the sources of demand would need to take place in the United States: Waning fiscal stimulus on the part of the federal government and continuing retrenchment in spending by state and local governments would weigh on the economic recovery, and recent data raised questions as to whether private demand would strengthen enough to increase resource utilization. </p> <p> The incoming data on the labor market were weaker than meeting participants had anticipated. Private-sector payrolls grew sluggishly in recent months. The unemployment rate declined a bit, but that reflected a decrease in labor force participation rather than an increase in employment. Policymakers discussed a variety of factors that appeared to be contributing to the slow pace of job growth. A number of participants reported that business contacts again indicated that uncertainty about future taxes, regulations, and health-care costs made them reluctant to expand their workforces. Instead, businesses had continued to meet growth in demand for their products largely through productivity gains and by increasing existing employees' hours. Several participants suggested that structural factors such as mismatches between unemployed workers' skills and the needs of employers with job openings, or unemployed workers' inability to move to a new locale, were contributing to the elevated level and long average duration of unemployment. Other participants, while agreeing that such factors could restrain job growth and contribute to high rates of unemployment, noted that employment was lower than a year earlier and that job openings were only slightly above their lowest level in 10 years, indicating that few firms saw a need to add employees. Most participants viewed weak demand for firms' outputs as the primary problem; they saw substantial scope for stronger aggregate demand for goods and services to spur employment in a wide range of industries. </p> <p> Weighing the available information, participants again expected the recovery to continue and to gather strength in 2011. Nonetheless, most saw the incoming data as indicating that the economy was operating farther below its potential than they had thought, that the pace of recovery had slowed in recent months, and that growth would be more modest during the second half of 2010 than they had anticipated at the time of the Committee's June meeting. Some policymakers whose forecasts for growth had been in the low end of the range of participants' earlier projections viewed the recent data as consistent with their earlier forecasts for a weak recovery. A few participants, observing that month-to-month data releases are noisy and subject to revision, did not see the recent data as clearly indicating a change in the outlook. Many policymakers judged that downside risks to the U.S. recovery had become somewhat larger; a few saw the incoming data as suggesting a greater risk that private demand for goods and services might not grow enough to offset waning fiscal stimulus and a smaller impetus from inventory restocking. In contrast, most saw a reduced risk of financial turmoil in Europe and attendant spillovers to U.S. financial markets. </p> <p> Policymakers generally saw the inflation outlook as little changed. They observed that a range of measures continued to indicate subdued underlying inflation and that growth in wages and compensation remained quite moderate. Many said they expected underlying inflation to stay, for some time, below levels they judged most consistent with the dual mandate to promote maximum employment and price stability. Participants viewed the risk of deflation as quite small, but a number judged that the risk of further disinflation had increased somewhat despite the stability of longer-run inflation expectations. One noted that survey measures of longer-run inflation expectations had remained positive in Japan throughout that country's bout of deflation. A few saw the continuation of exceptionally accommodative monetary policy in the United States as posing some upside risk to inflation expectations and actual inflation in the medium run. </p> <p> <strong>Committee Policy Action</strong><br> In their discussion of monetary policy for the period ahead, Committee members agreed that it would be appropriate to maintain the target range of 0 to 1/4 percent for the federal funds rate. Members still saw the economic expansion continuing, and most believed that inflation was likely to stabilize near recent low readings in coming quarters and then gradually rise toward levels they consider more consistent with the Committee's dual mandate for maximum employment and price stability. Nonetheless, members generally judged that the economic outlook had softened somewhat more than they had anticipated, particularly for the near term, and some saw increased downside risks to the outlook for both growth and inflation. Some members expressed a concern that in this context any further adverse shocks could have disproportionate effects, resulting in a significant slowing in growth going forward. While no member saw an appreciable risk of deflation, some judged that the risk of further near-term disinflation had increased somewhat. More broadly, members generally saw both employment and inflation as likely to fall short of levels consistent with the dual mandate for longer than had been anticipated. </p> <p> Against this backdrop, the Committee discussed the implications for financial conditions and the economic outlook of continuing its policy of not reinvesting principal repayments received on MBS or maturing agency debt. The decline in mortgage rates since spring was generating increased mortgage refinancing activity that would accelerate repayments of principal on MBS held in the SOMA. Private investors would have to hold more longer-term securities as the Federal Reserve's holdings ran off, making longer-term interest rates somewhat higher than they would be otherwise. Most members thought that the resulting tightening of financial conditions would be inappropriate, given the economic outlook. However, members noted that the magnitude of the tightening was uncertain, and a few thought that the economic effects of reinvesting principal from agency debt and MBS likely would be quite small. Most members judged, in light of current conditions in the MBS market and the Committee's desire to normalize the composition of the Federal Reserve's portfolio, that it would be better to reinvest in longer-term Treasury securities than in MBS. While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS might become desirable if conditions were to change. A few members worried that reinvesting principal from agency debt and MBS in Treasury securities could send an inappropriate signal to investors about the Committee's readiness to resume large-scale asset purchases. Another member argued that reinvesting repayments of principal from agency debt and MBS, thereby postponing a reduction in the size of the Federal Reserve's balance sheet, was likely to complicate the eventual exit from the period of exceptionally accommodative monetary policy and could have adverse macroeconomic consequences in future years. </p> <p> All but one member concluded that it would be appropriate to begin reinvesting principal received from agency debt and MBS held in the SOMA by purchasing longer-term Treasury securities in order to keep constant the face value of securities held in the SOMA and thus avoid the upward pressure on longer-term interest rates that might result if those holdings were allowed to decline. Several members emphasized that in addition to continuing to develop and test instruments to facilitate an eventual exit from the period of unusually accommodative monetary policy, the Committee would need to consider steps it could take to provide additional policy stimulus if the outlook were to weaken appreciably further. Given the softer tone of recent data and the more modest near-term outlook, members agreed that some changes to the statement's characterization of the economic and financial situation were necessary. All members but one judged that it was appropriate to reiterate the expectation that economic conditions--including low levels of resource utilization, subdued inflation trends, and stable inflation expectations--were likely to warrant exceptionally low levels of the federal funds rate for an extended period. One member argued that the recovery was proceeding about as outlined earlier this year and that starting a gradual process of removing policy accommodation fairly soon would better foster the Committee's long-run objectives of maximum employment and price stability. </p> <p> At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive:<br> </p> <blockquote> "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to maintain the total face value of domestic securities held in the System Open Market Account at approximately $2 trillion by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability." </blockquote> <p> The vote encompassed approval of the statement below to be released at 2:15 p.m.: </p> <blockquote> "Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated. <p> Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. </p> <p> To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.<a target="_blank" title="footnote 1" href="http://www.federalreserve.gov/monetarypolicy/fomcminutes20100810.htm#fn1">¹</a><a target="_blank" name="f1"> </a>The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature. </p> <p> The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <hr align="left" width="33%" size="1"> <div class="footnotes"> <a target="_blank" name="fn1">1. </a>The Open Market Desk will issue a technical note shortly after the statement providing operational details on how it will carry out these transactions." <a target="_blank" href="http://www.federalreserve.gov/monetarypolicy/fomcminutes20100810.htm#f1">Return to text</a> </div> </blockquote> <p> <strong>Voting for this action:</strong> Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Donald L. Kohn, Sandra Pianalto, Eric Rosengren, Daniel K. Tarullo, and Kevin Warsh. </p> <p> <strong>Voting against this action:</strong> Thomas M. Hoenig. </p> <p> Mr. Hoenig dissented because he thought it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. Mr. Hoenig felt that the "extended period" expectation could limit the Committee's flexibility to begin raising rates modestly in a timely fashion, and he believed that the recovery, which had entered its second year and was expected to continue at a moderate pace, did not require support from additional accommodation in monetary policy. Mr. Hoenig was also concerned that these accommodative policy positions could result in the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability. </p> <p> It was agreed that the next meeting of the Committee would be held on Tuesday, September 21, 2010. The meeting adjourned at 1:35 p.m. on August 10, 2010. </p> <p> <strong>Notation Vote</strong><br> By notation vote completed on July 13, 2010, the Committee unanimously approved the minutes of the FOMC meeting held on June 22-23, 2010. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4868387 Tue, 31 Aug 2010 18:26:05 GMT fib_1618 http://forums.technicalwatch.com/post?id=4838878 Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated. <p> Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. </p> <p> To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.<a target="_blank" name="f1"> </a>The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature. </p> <p> The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. </p> <p> Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve's holdings of longer-term securities at their current level was required to support a return to the Committee's policy objectives. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4838878 Tue, 10 Aug 2010 18:21:22 GMT fib_1618 http://forums.technicalwatch.com/post?id=4831544 <span style="font: 11px arial;"> The U.S. Monster Employment Index annual growth rate remained at 21 percent (24-point increase) with the degree of Julys seasonal slowdown matching the historical July average seen in the Index, suggesting some stability in underlying job market drivers. The Index declined by three points (two percent) on a monthly basis reflecting a seasonal easing in online recruitment activity seen at this stage of the year as companies reduce hiring activity after meeting their summer requirements.<br><br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.com. <br><br> During July, online job availability rose in 8 of the Indexs 20 industry sectors and in 8 of the 23 occupational categories monitored. Index results for the past 13 months are as follows: <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">Ju1. 10</span></td> <td><span style="font: 11px arial;">Jun. 10</span></td> <td><span style="font: 11px arial;">May 10</span></td> <td><span style="font: 11px arial;">Apr. 10</span></td> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> <td><span style="font: 11px arial;">Jul. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">138</span></td> <td><span style="font: 11px arial;">141</span></td> <td><span style="font: 11px arial;">134</span></td> <td><span style="font: 11px arial;">133</span></td> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> <td><span style="font: 11px arial;">114</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">The Monster Employment Index monthly contraction in July was in line with seasonal expectations considering the summer months tend to be a slower period for recruitment activity, said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. Year-over-year growth remained unchanged between June and July. The fact that hiring is more robust than a year ago points to a general improvement in the nations hiring conditions as the economy continues its slow but steady recovery. <br><br> <strong>Online Demand for the Education Services Industry Registers Largest Increase in July; Retail Trade and Finance Edge Down; Mining and Transportation/ Warehousing See Strongest Year-over-Year Growth</strong> <br> Online recruitment activity rose in eight of the 20 industries monitored by the Index between June and July, while 18 are showing positive growth trends on an annual basis. <br><br> Among the industries, education and public administration registered large monthly increases in online job availability in July. Both sectors, however, exhibited notably restrained hiring activity during the traditionally stronger springtime recruitment period. Moreover, Julys increase in demand was mainly for part-time and contract jobs, possibly providing sector employers more flexibility amid the challenging budgetary climate. Mining, quarrying, oil and gas extraction also rose in July, extending its growth trend since January, and annual growth for this category was at a robust 53 percent in July, leading all sectors. Manufacturing; and transportation and warehousing each gained 2 percent with both sectors recording fairly robust growth trends since January, coinciding with a consistent rise in manufacturing sector payrolls over the latest 6-month period. <br><br> In contrast, real estate remained the weakest trending sector in the Index, reflecting the challenging housing market conditions with online demand falling 5 percent in July, and remaining flat year-over-year. <br> <br>On an annual basis, mining; and transportation and warehousing led all industries followed by utilities and professional, scientific, and technical services. <br> <br> <strong>Healthcare Support Occupations Register Largest Gains in June; Food Preparation and Serving; Management Rise; Farming Edges Down; Legal and Business/ Financial Operations Register Largest Annual Growth Rates</strong> <br> Overall online demand for workers rose in eight and remained flat in 3 of the 23 occupational categories in July. <br><br> Among occupations, production; and transportation and material moving registered the strongest monthly increases in online job availability in July. Online demand for healthcare support occupations also continued to edge higher, suggesting that employers may have initiated an early start to their recruiting season, which typically gets underway later in the summer. <br><br> Meanwhile, the protective service category registered the steepest decline in online recruitment activity among occupations in July. Business and financial operations; and military- specific also showed substantially fewer online opportunities. <br><br> <strong>Online Job Availability Declines in All U.S. Census Bureau Regions in July; New York Records Highest Annual Growth amongst States</strong><br> During July, demand contracted in all U.S. Census Bureau regions with Middle Atlantic registering the most moderate reduction in demand. However this region continues to lead all regions from an annual growth perspective. South Atlantic was the only region to record a slowdown in annual growth rate from 17 percent to 15 percent in July. <br><br> Among the 50 states and the District, only 2 registered increased online job opportunities in July, while 6 remained flat. New York was the top state by measure of annual growth in the Index. With the exception of Alaska, annual growth was positive for every state in the Index.<br><br> <strong> All 28 Major U.S. Metro Markets Monitored By The Index Register Positive Annual Growth</strong> <br> During July, online recruitment activity fell in 26 of the 28 major metropolitan markets, monitored by the Index. Philadelphia was the only market to exhibit growth in online job demand with a majority of the occupational categories registering expanded opportunities. Over the year, demand trends have developed notably for production, transportation, management, and office and administrative support; however, a majority of the occupational groups continue to remain below baseline levels in the Index. <br><br> In contrast, Washington, DC registered its steepest monthly fall in the Index with online recruitment levels contracting more notably than recorded typically for this time of year, especially for technical occupations like IT, architecture and engineering, and the sciences. Nonetheless, the demand for workers appears stronger than it was a year ago for the market as a whole. The major metropolitan markets of Florida also showed an unseasonal moderation in online recruitment activity. Occupationally, recruitment trends were generally similar across Miami, Orlando, and Tampa, with largest monthly declines centered around business and financial operations, the healthcare occupations, and construction. <br> </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4831544 Thur, 05 Aug 2010 12:33:24 GMT fib_1618 http://forums.technicalwatch.com/post?id=4783264 <span style="font: 11px arial;">The Monster Employment Index <span style="font-weight: bold;">climbed 7 points</span> in June and the annual growth rate, now at 21 percent (24-point increase), is at its highest since September 2006.<br><br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.com. <br><br> During June, online job availability rose in 13 of the Indexs 20 industry sectors and in 17 of the 23 occupational categories monitored. Index results for the past 13 months are as follows: <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">Jun. 10</span></td> <td><span style="font: 11px arial;">May 10</span></td> <td><span style="font: 11px arial;">Apr. 10</span></td> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> <td><span style="font: 11px arial;">Jul. 09</span></td> <td><span style="font: 11px arial;">Jun. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">141</span></td> <td><span style="font: 11px arial;">134</span></td> <td><span style="font: 11px arial;">133</span></td> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">117</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">Several industries and occupations are now displaying several months of positive growth trends in the Monster Employment Index and this would indicate some fundamental strengthening in these areas, said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. While substantial job creation has yet to occur to reduce the existing levels of unemployment and underemployment, job availability is improved from where it was a year ago. <br><br> <strong>Online Demand for Accommodation and Food Services Industry Registers Largest Increase in June; Retail Trade and Finance Edge Down</strong> <br> OOnline demand rose in 13 and remained flat in 5 of the 20 industries monitored by the Index. The accommodation and food services industry registered the largest growth in June, suggesting a belated start to seasonal recruitment after relatively tempered spring-time hiring. Management of companies and enterprises rose to its highest level since November of 2008. The return of recruitment activity in this industry coincides with a general rise in business and merger/acquisition activity. Manufacturing held steady while transportation and warehousing continued on the steady growth trend seen since February. Rising production and capacity utilization figures were reported by the Federal Reserve, suggesting workweek hours have increased. This, coupled with a rise in advertised opportunities in the transportation industry suggests expansion in production and commerce in the long-term. <br><br> In contrast, the consumer-driven retail trade sector and finance were the only two industries to edge down in June while agriculture; education; and utilities remained flat. <br><br> On an annual basis, mining; and transportation and warehousing led all industries. Construction also continued its upward trend closely followed by utilities. <br> <br> <strong>Healthcare Support Occupations Register Largest Gains in June; Food Preparation and Serving; Management Rise; Farming Edges Down</strong> <br> Overall online demand for workers rose in 17 and remained flat in 5 of the 23 occupational categories in June with healthcare support registering the largest gain on a month-over-month basis. Food preparation and serving related occupations also saw a notable rise in demand as reflected by the rise in the accommodation and food services industry as a whole. Similarly, demand for management occupations also expanded as job availability at the executive and upper management levels continued to emerge. Online job demand for personal care and service; life, physical and social sciences; and architecture occupations also continued to edge up in June. <br><br> Meanwhile, farming was the only occupational category to decline in June, while protective services; sales and relation; production; and installation remained flat. <br><br> Business and financial operations led all occupational categories in terms of year-over-year growth with a 28 percent annual rise in opportunities closely followed by arts and design; and transportation and warehousing that also continued their uptrend in annual growth rate. <br><br> <strong>Online Job Availability Rises in All U.S. Census Bureau Regions in June</strong><br> During June, demand rose in all U.S. Census Bureau regions with West North Central registered the largest monthly as well as 3-month gain. On an annual basis, Middle Atlantic exhibited the most improvement while Mountain registered the most sluggish expansion in demand which was nonetheless positive at 13 percent. <br><br> Among the 50 states and the District, 49 registered increased online job opportunities in June, with a number of states, such as the Dakotas and Wyoming, registering notable rises following somewhat sluggish recruitment trends in the earlier spring months. Among large states, New York continued to remain at the top by measure of annual growth in the Index. Annual growth was positive for every state in the Index, with Nevada, Maryland, and Mississippi exhibiting the slowest rates.<br><br> <strong> All 28 Major U.S. Metro Markets Monitored By The Index Register Increases in June</strong> <br> During June, online recruitment activity rose in all major metropolitan markets, with Detroit registering the largest monthly gain. By volume, the largest expansion in demand was for sales workers, but the increase in job opportunities for this occupational group in the latest month was somewhat tempered. The largest month-on-month increases were seen in legal and healthcare support occupations, with computer and mathematical (IT) also noted a substantial rise. While job availability has expanded from year-ago levels, demand for a majority of the occupational groups still remains below baseline levels in the Index. <br><br> In contrast, Phoenix registered the most tempered monthly increase among major metropolitan markets. Demand eased in the education, construction, and production sectors counterbalancing the increases in business and financial operations; and sales. Year-on-year, demand was higher for most occupational groups, with a life, physical, and social sciences being a notable exception, down 4 percent on an annual basis. <br><br> >From a medium-term view, Philadelphia led all markets, rising 27 percent over the past 3 months. Year-over-year, all 28 markets reported positive growth. Portland continued to record the most substantial gain in online demand on an annual basis. The most moderate annual growth rates were seen in San Diego and Houston. <br> </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4783264 Thur, 01 Jul 2010 14:28:13 GMT fib_1618 http://forums.technicalwatch.com/post?id=4773032 Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time. <p> Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. </p> <p> The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committees flexibility to begin raising rates modestly. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4773032 Wed, 23 Jun 2010 18:16:15 GMT fib_1618 http://forums.technicalwatch.com/post?id=4773000 <p> <strong>Developments in Financial Markets and the Federal Reserve's Balance Sheet</strong><br> The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets during the period since the Committee met on March 16, 2010. The Manager also reported on System open market operations in Treasury securities and in agency debt and agency mortgage-backed securities (MBS) during the intermeeting period. By unanimous vote, the Committee ratified those transactions. There were no open market operations in foreign currencies for the System's account over the intermeeting period. </p> <p> By unanimous vote, the Committee decided to extend the reciprocal currency ("swap") arrangements with the Bank of Canada and the Banco de Mexico for an additional year, beginning in mid-December 2010; these arrangements are associated with the Federal Reserve's participation in the North American Framework Agreement of 1994. The arrangement with the Bank of Canada is in the amount of $2 billion equivalent, and the arrangement with the Banco de Mexico is in the amount of $3 billion equivalent. The vote to renew the System's participation in these swap arrangements was taken at this meeting because of a provision in the arrangements that requires each party to provide six months' prior notice of an intention to terminate its participation. </p> <p> The staff also briefed the Committee on recent progress in the development of reserve draining tools. The Desk was preparing to conduct small-scale reverse repurchase operations to ensure its ability to use agency MBS collateral. It also continued to work toward expansion of the set of counterparties for reverse repurchase operations. The staff noted that the Board had recently approved changes to Regulation D that would be necessary for the establishment of a term deposit facility. </p> <p> The staff next gave a presentation on potential longer-run strategies for managing the SOMA. At previous meetings, Committee participants had expressed support for steps to reduce the size of the Federal Reserve's balance sheet over time and return the composition of the SOMA to only Treasury securities. The staff discussed the potential portfolio paths and macroeconomic consequences of a number of different strategies for accomplishing these objectives. To date, the Desk had been reinvesting the proceeds of all maturing Treasury securities in newly issued Treasury securities, but it had not been reinvesting principal and interest payments on maturing agency debt and agency MBS, nor had it been selling securities. One strategy considered in the staff presentation was a continuation of the current practice, which would normalize the balance sheet very gradually. In addition, the staff presented information on a number of other strategies that included sales of SOMA holdings of agency debt and MBS and under which the proceeds of maturing Treasury securities would not be reinvested; these strategies differed by the date and circumstances under which sales would be initiated, by the average pace of sales, and by the degree to which the timing and pace of such sales would be adjusted in response to financial and economic developments. </p> <p> Meeting participants agreed broadly on key objectives of a longer-run strategy for asset sales and redemptions. The strategy should be consistent with the achievement of the Committee's objectives of maximum employment and price stability. In addition, the strategy should normalize the size and composition of the balance sheet over time. Reducing the size of the balance sheet would decrease the associated reserve balances to amounts consistent with more normal operations of money markets and monetary policy. Returning the portfolio to its historical composition of essentially all Treasury securities would minimize the extent to which the Federal Reserve portfolio might be affecting the allocation of credit among private borrowers and sectors of the economy. </p> <p> Most participants expressed a preference for strategies that would eventually entail sales of agency debt and MBS in order to return the size and composition of the Federal Reserve's balance sheet to a more normal configuration more quickly than would be accomplished by simply letting MBS and agency securities run off. They agreed that sales of agency debt and MBS should be implemented in accordance with a framework communicated in advance and be conducted at a gradual pace that potentially could be adjusted in response to changes in economic and financial conditions. </p> <p> Participants expressed a range of views on some of the details of a strategy for asset sales. Most participants favored deferring asset sales for some time. A majority preferred beginning asset sales some time after the first increase in the Federal Open Market Committee's (FOMC) target for short-term interest rates. Such an approach would postpone any asset sales until the economic recovery was well established and would maintain short-term interest rates as the Committee's key monetary policy tool. Other participants favored a strategy in which the Committee would soon announce a general schedule for future asset sales, with a date for the initiation of sales that would not necessarily be linked to the increase in the Committee's interest rate target. A few preferred to begin sales relatively soon. Earlier sales would normalize the size and composition of the balance sheet sooner and would unwind at least part of the unconventional policy stimulus put in place during the crisis before conventional policy firming got under way. Some participants saw advantages to varying the FOMC's holdings of longer-term assets system-atically in response to economic and financial developments. However, others thought that a pre-announced pace of sales that was unlikely to vary much would provide a high degree of certainty about sales, helping to limit disruptions in financial markets. </p> <p> The views of participants also differed to some extent regarding the appropriate pace of asset sales. Most preferred that the agency debt and MBS held in the portfolio be sold at a gradual pace that would complete the sales about five years after they began. One possibility would be for the pace to be relatively slow initially but to increase over time, allowing markets to adjust gradually. A couple of participants thought faster sales, conducted over about three years, would be appropriate and felt that such a pace would not put undue strain on financial markets. In their view, a relatively brisk pace of sales would reduce the chance that the elevated size of the Federal Reserve's balance sheet and the associated high level of reserve balances could raise inflation expectations and inflation beyond levels consistent with price stability or could generate excessive growth of credit when the economy and banking system recover more fully. </p> <p> Participants saw both advantages and disadvantages to not rolling over Treasury securities as they mature. On the one hand, redeeming Treasury securities would contribute to a more expeditious normalization of the size of the balance sheet and the quantity of reserves. On the other hand, such redemptions could put upward pressure on interest rates and would tend to work against the objective of returning the SOMA to an all-Treasuries composition. </p> <p> No decisions about the Committee's longer-run strategy for asset sales and redemptions were made at this meeting. For the time being, participants agreed that the Desk should continue the interim approach of allowing all maturing agency debt and all prepayments of agency MBS to be redeemed without replacement while rolling over all maturing Treasury securities. Participants agreed to give further consideration to their longer-run strategy at a later date. </p> <p> <strong>Staff Review of the Economic Situation</strong><br> The information reviewed at the April 27-28 meeting suggested that, on balance, the economic recovery was proceeding at a moderate pace and that the deterioration in the labor market was likely coming to an end. Consumer spending continued to post solid gains in the first three months of the year, and business investment in equipment and software appeared to have increased significantly further in the first quarter. In addition, growth of manufacturing output remained brisk, and gains became more broadly based across industries. However, residential construction, while having edged up, was still depressed, construction of nonresidential buildings remained on a steep downward trajectory, and state and local governments continued to retrench. Consumer price inflation remained low. </p> <p> The labor market showed signs of a nascent recovery in recent months. Private nonfarm payroll employment increased over the first quarter of 2010--the first quarterly increase since the onset of the recession. The average workweek also rose last quarter and data from the household survey pointed to a firming in labor market conditions. The unemployment rate held steady at 9.7 percent throughout the first quarter, and the labor force participation rate increased over the past few months following sharp declines over the second half of last year. The number of new job losers as a percentage of household employment continued to drop, and the fraction of workers on part-time schedules for economic reasons moved down since the end of last year. Nonetheless, finding a job remained very difficult, and the average duration of unemployment spells increased further. </p> <p> Industrial production continued to expand at a brisk pace during the first quarter. Recent production gains remained broadly based across industries, as both foreign demand and a mild restocking of inventories contributed positively to output growth. Capacity utilization stood significantly above the trough recorded last June but was still well below its long-run average. Light motor vehicle production stepped up in March, and assemblies in the first quarter were above their fourth-quarter average as automakers cautiously began to rebuild dealers' inventories. Production in high-tech industries increased solidly, and available indicators pointed toward further expansion in this sector in the near term. On balance, indicators of near-term manufacturing activity remained quite positive. </p> <p> Consumer spending continued to rise at a solid pace through March, with recent gains pronounced for most non-auto goods and food services. Despite signs of improvement recently, the determinants of spending remained subdued. While wages and salaries picked up early this year, real disposable income was flat in February after a slight decline in January; housing wealth was still well below its level prior to the crisis. Furthermore, although banks indicated a somewhat greater willingness to lend to consumers in recent months, terms and standards on consumer loans remained restrictive. Additionally, consumer sentiment dropped back in early April and was little changed, on net, since the beginning of the year. </p> <p> Starts of new single-family homes edged up, on net, over February and March, but much of this increase likely reflected delayed projects getting under way as weather conditions returned to normal. Home sales strengthened noticeably, as sales of new single-family homes jumped and sales of existing single-family homes rose as well. However, both new home sales and existing home sales were likely boosted, at least in part, by the anticipated expiration of the homebuyer tax credit. Interest rates for conforming 30-year fixed-rate mortgages changed little in recent months and remained at levels that were very low by historical standards. </p> <p> Real spending on equipment and software continued to rebound in the first quarter. Investment in high-tech equipment and transportation advanced further, and real spending for equipment other than high-tech and transportation appeared to turn up sharply after falling for more than a year, suggesting that the recovery in equipment and software investment became more broadly based. The recovery in equipment and software spending was consistent with the strengthening in many indicators of business activity. In contrast, the nonresidential construction sector continued to contract. Real outlays on structures outside drilling and mining fell steeply last year, and recent data on nominal expenditures through February suggested a further decline in the first quarter. The weakness was widespread across categories and likely reflected elevated vacancy rates, low levels of property prices, and difficulties in obtaining financing for new projects. Real spending on drilling and mining structures picked up strongly over the second half of last year in response to the rebound in oil and natural gas prices. </p> <p> Available data suggested that the pace of inventory liquidation moderated further in the first quarter after slowing sharply in the fourth quarter of last year. Inventories appeared to approach comfortable levels relative to sales in the aggregate, although inventory positions across industries varied. Months' supply remained elevated for equipment, materials, and, to a lesser degree, construction supplies. By contrast, inventories of consumer goods, business supplies, and high-tech goods appeared low relative to demand. </p> <p> Consumer price inflation was low in recent months; both headline and core personal consumption expenditures (PCE) prices were estimated to have risen slightly in March after remaining unchanged in February. On a 12-month change basis, core PCE prices slowed over the year ending in March, with deceleration widespread across categories of expenditures. In contrast, the corresponding change in the headline index moved up noticeably, as energy prices rebounded. Survey measures of long-term inflation expectations were fairly stable in recent months at levels slightly lower than those posted a year ago. Meanwhile, measures of inflation compensation based on Treasury inflation-protected securities (TIPS) edged up slightly. Cost pressures from rising commodity prices showed through to prices at early stages of processing, and the producer price index for core intermediate materials continued to rise rapidly through March. However, measures of labor costs decelerated sharply last year, as compensation per hour in the nonfarm business sector increased only slightly over the four quarters of 2009. </p> <p> The U.S. international trade deficit widened in February, as a rise in nominal imports outpaced a small increase in exports. Increased exports of industrial supplies, capital goods, and automotive products were partly offset by declines in agricultural goods and consumer goods. The February rise in imports reversed a similarly sized decrease in January. Imports of oil accounted for more than one-third of the January decline, reflecting lower volumes, but they accounted for only about one-tenth of the February increase, as volumes rebounded but prices fell. Imports of capital goods rose as strong computer imports more than offset falling aircraft purchases, and imports of industrial supplies and consumer goods also moved up. </p> <p> Recent indicators in the advanced foreign economies suggested a continued divergence in the pace of recovery, with a strong performance in Canada, a moderate expansion in Japan, and a more subdued rebound in Europe. Fiscal strains in Greece intensified during the intermeeting period, and in mid-April, euro-area member states announced a plan to provide financing aid to Greece in coordination with the International Monetary Fund. However, at the time of the April FOMC meeting, no official agreement had been reached concerning the scale, composition, and implementation of such an aid package. Economic activity in emerging markets continued to expand robustly in the first quarter. Despite the strength of exports, merchandise trade balances declined for some countries where strong domestic demand caused imports to outpace exports. In China, real gross domestic product (GDP) increased at a higher-than-expected annual rate in the first quarter as the economic recovery remained broad based, with industrial production, investment, and domestic demand continuing to grow briskly. In Latin America, indicators suggested that economic activity in Mexico and Brazil expanded further in the first quarter. Foreign inflation was boosted by increases in the prices of oil and other commodities, but core inflation generally remained subdued. </p> <p> <strong>Staff Review of the Financial Situation</strong><br> The decision by the FOMC at the March meeting to keep the target range for the federal funds rate unchanged and to retain the "extended period" language in the statement was largely anticipated by market participants. However, some market participants reportedly interpreted the retention of the "extended period" language as pointing to a longer period of low rates than previously expected, and Eurodollar futures rates temporarily declined a bit in response. </p> <p> On balance over the intermeeting period, the expected path of policy edged down slightly. Yields on 2-year and 10-year nominal Treasury securities posted small mixed changes amid some volatility that reportedly reflected evolving views about the U.S. fiscal outlook, prospects for U.S. economic growth, and the fiscal situation in peripheral European countries. Inflation compensation--the difference between nominal Treasury yields and yields on TIPS--rose some over the period, but survey measures of longer-term inflation expectations were about unchanged. </p> <p> Overall, conditions in short-term funding markets remained generally stable during the intermeeting period. Spreads between London interbank offered rates (Libor) and overnight index swap (OIS) rates were about unchanged at levels near those that prevailed in late 2007, although they began to edge up in the final days of the intermeeting period. Spreads in the commercial paper market were little changed. Equity indexes rose, on balance, over the intermeeting period, with bank shares outperforming the broader market. Stock prices were supported by somewhat better-than-expected macroeconomic data and a favorable response by investors to the initial batch of first-quarter earnings reports, especially those of banking institutions. Option-implied volatility on the S&amp;P 500 index generally declined over the period but jumped at end of April on renewed concerns regarding the fiscal situation in Greece. The gap between the staff's estimate of the expected real equity return over the next 10 years for S&amp;P 500 firms and the real 10-year Treasury yield--a rough measure of the equity risk premium--remained well above its average over the past decade. Yields on investment-grade corporate bonds edged down, leaving their spreads to comparable-maturity Treasury securities a bit lower, at levels around those that prevailed in late 2007. Consistent with more-favorable investor sentiment toward risky assets, yields and spreads on speculative-grade corporate bonds declined, and secondary market prices of syndicated leveraged loans rose further. </p> <p> Overall, net debt financing by nonfinancial firms was positive in March. Issuance of nonfinancial bonds surged, and net issuance of commercial paper rebounded appreciably. Net equity issuance by nonfinancial firms was negative again in the first quarter as the solid pace of gross public issuance was more than offset by equity retirements from both cash-financed mergers and share repurchases. Financial firms issued a significant volume of debt securities in the first quarter and also raised a moderate amount of gross funds in the equity market, a pattern that appeared to continue in the first half of April. Credit quality in the commercial real estate sector continued to deteriorate as the delinquency rate for securitized commercial mortgages increased again in March. The decline in outstanding commercial mortgage debt in the fourth quarter of last year was the largest on record. Nonetheless, indexes of prices for credit default swaps on commercial mortgage-backed securities ticked up noticeably over the period, in line with the overall reduction in financial market risk premiums. </p> <p> The conclusion of purchases under the Federal Reserve's agency MBS program had only a modest market effect. Over the intermeeting period, spreads on agency MBS retraced much of the increase seen around the time of the program's conclusion, ending the period roughly unchanged. The factors contributing to the recent narrowing of MBS and mortgage spreads included the low level of mortgage originations, which damped the supply of new MBS, and Fannie Mae's and Freddie Mac's increased purchases of mortgages through their buyouts of delinquent loans. Consumer credit continued to trend lower in recent months, pushed down by a steep decline in revolving credit. Spreads on high-quality credit card and auto loan asset-backed securities (ABS) edged down over the period, with little upward pressure evident from the end of the portion of the Term Asset-Backed Securities Loan Facility supporting ABS. Nonetheless, fewer ABS were issued in the first quarter than in the fourth quarter, reflecting continued weakness in loan originations. Delinquency rates on consumer loans edged down further in February but remained very elevated. Spreads of interest rates on credit cards over yields on two-year Treasury securities continued to drift upward, while interest rates on new auto loans at dealerships and their spreads over yields on five-year Treasury securities extended their previous decline. </p> <p> After adjusting to remove the effects of banks' adoption of Financial Accounting Standards 166 and 167, bank credit contracted again in March, as both loans and securities holdings declined.<a target="_blank" title="footnote 2" href="http://www.federalreserve.gov/monetarypolicy/fomcminutes20100428.htm#fn2">²</a><a target="_blank" name="f2"> </a>The contraction in commercial and industrial loans remained pronounced. The drop in commercial real estate loans persisted, reflecting weak fundamentals that limited originations as well as charge-offs of existing loans. Residential real estate loans also decreased further in March, as did credit card loans and other consumer loans. </p> <p> M2 fell in March, reflecting a slowing in the expansion of liquid deposits along with a further contraction in small time deposits and a steep runoff in retail money market mutual funds. Currency grew at a moderate pace, likely as a result of continued demand for U.S. banknotes from abroad coupled with solid domestic demand. The monetary base contracted as the effect on reserves of purchases under the Federal Reserve's large-scale asset purchase programs was more than offset by a further contraction in credit outstanding under liquidity and credit facilities and an increase in the Treasury's balances at the Federal Reserve. </p> <p> Until the intensification of the Greek crisis near the end of the intermeeting period, equity indexes were higher in nearly all countries, and emerging-market risk spreads had generally declined. These moves appeared to reflect growing confidence that the global recovery was gaining momentum, particularly in emerging market economies. However, sovereign debt spreads in Greece, Portugal, and other peripheral European countries widened in the days leading up to the April FOMC meeting, as investor anxiety about the fiscal situation in those countries increased. Downgrades to the credit ratings of Greece and Portugal weighed on investor sentiment, and global markets retraced some of their earlier gains. </p> <p> Over the intermeeting period, the Bank of Japan doubled the size of its three-month fixed-rate funds facility, the Bank of Canada dropped its conditional commitment to keeping rates steady through the first half of the year, and the Reserve Bank of Australia raised its policy rate. The trade-weighted value of the dollar changed little, on net; gains against the euro and yen were offset by declines against many emerging market currencies. </p> <p> <strong>Staff Economic Outlook</strong><br> The economic forecast prepared by the staff for the April FOMC meeting was similar to that developed for the March meeting. The staff continued to project that the accommodative stance of monetary policy, together with a further attenuation of financial stress, the waning of adverse effects of earlier declines in wealth, and improving household and business confidence, would support a moderate recovery in economic activity and a gradual decline in the unemployment rate over the next two years. The staff forecast for both real GDP growth and the unemployment rate through the end of 2011 was roughly in line with previous projections. </p> <p> Recent data on core consumer prices led the staff to mark down slightly its forecast for core PCE inflation. The staff continued to anticipate that downward pressure on inflation from the substantial amount of projected resource slack would be tempered by stable inflation expectations. With energy price increases expected to slow next year, total PCE inflation was seen as likely to fall back in line with core inflation by the end of 2011, as in previous projections. </p> <p> <strong>Participants' Views on Current Conditions and the Economic Outlook</strong><br> In conjunction with this FOMC meeting, all meeting participants--the five members of the Board of Governors and the presidents of the 12 Federal Reserve Banks--provided projections of economic growth, the unemployment rate, and consumer price inflation for each year from 2010 through 2012 and over a longer horizon. Longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge over time under appropriate monetary policy and in the absence of further shocks. Participants' forecasts through 2012 and over the longer run are described in the Summary of Economic Projections, which is attached as an addendum to these minutes. </p> <p> In their discussion of the economic situation and outlook, meeting participants agreed that the incoming data and information received from business contacts indicated that economic activity continued to strengthen and the labor market was beginning to improve. Although some of the recent data on economic activity had been better than anticipated, most participants saw the incoming information as broadly in line with their earlier projections for moderate growth; accordingly, their views on the economic outlook had not changed appreciably. Participants expected the economic recovery to continue, but, consistent with experience following previous financial crises, most anticipated that the pickup in output would be rather slow relative to past recoveries from deep recessions. A moderate pace of expansion, in turn, would imply only a modest improvement in the labor market this year, with the unemployment rate declining gradually. Most participants again projected that the economy would grow somewhat faster in 2011 and 2012, generating a more pronounced decline in the unemployment rate. In light of stable longer-term inflation expectations and the likely continuation of substantial resource slack, policymakers anticipated that both overall and core inflation would remain subdued through 2012, with measured inflation somewhat below rates that policymakers considered to be consistent over the longer run with the Federal Reserve's dual mandate. </p> <p> Participants expected that economic growth would continue: Recent data pointed to significant gains in retail sales, business spending on equipment and software had picked up substantially, and reports from business contacts and regional surveys indicated that production was increasing briskly in many sectors. Participants agreed that the growth in real GDP appeared to reflect a strengthening of private final demand and not just fiscal stimulus and a slower pace of inventory decumulation; this welcome development lessened policymakers' concerns about the economy's ability to maintain a self-sustaining recovery without government support. Businesses appeared to be gaining confidence in the economic recovery, and narrowing credit spreads in private debt markets were allowing low policy rates to be reflected more fully in the cost of capital. At the same time, rising stock prices and the apparent stabilization of house prices were helping to repair household balance sheets. As a result, consumers and firms were beginning to satisfy demands for durable goods and capital equipment that had been postponed during the economic downturn. Many participants noted that employment had increased in recent months, and that they expected a further firming of labor market conditions going forward. A stronger labor market could continue to boost consumer and business confidence and so contribute to further gains in spending. </p> <p> Although these developments were positive, participants noted several factors that likely would continue to restrain expansion in economic activity and posed some downside risks. The recent increase in consumer spending appeared to be supported importantly by pent-up demands and possibly by other temporary factors, such as unusually large income tax refunds. With the personal saving rate having dropped back to a relatively low level, it seemed unlikely that consumer spending would be the major factor driving growth as the recovery progressed. Moreover, the recovery in the housing market appeared to have stalled in recent months despite various forms of government support. Although residential real estate values seemed to be stabilizing and in some areas had reportedly moved higher, housing sales and starts had leveled off in recent months at depressed levels. Some participants saw the possibility of elevated foreclosures adding to the already very large inventory of vacant homes as posing a downside risk to home prices, thereby limiting the extent of the pickup in residential investment for a while. </p> <p> In the business sector, prospects for nonresidential construction outside the energy sector remained weak. Commercial real estate activity continued to fall in most parts of the country as a result of deteriorating fundamentals, including declining occupancy and rental rates and tight credit conditions. However, a number of participants noted that investment in equipment and software had been strengthening, and they relayed anecdotal information from their business contacts that suggested continued growth in orders for capital equipment. </p> <p> Business investment was expected to be supported by improved conditions in financial markets. Large firms with access to capital markets appeared to be having little difficulty in obtaining credit, and in many cases they also had ample retained earnings with which to fund their operations and investment. However, many participants noted that while financial markets had improved, bank lending was still contracting and credit remained tight for many borrowers. Smaller firms in particular reportedly continued to face substantial difficulty in obtaining bank loans. Because such firms tend to be more dependent on commercial banks for financing, participants saw limited credit availability as a potential constraint on future investment and hiring by small businesses, which normally are a significant source of employment growth in recoveries. Some participants noted that many small and regional banks were vulnerable to deteriorating performance of commercial real estate loans. </p> <p> Economic conditions abroad, especially in several emerging Asian economies, continued to strengthen in recent months, contributing to gains in U.S. exports. However, participants saw the escalation of fiscal strains in Greece and spreading concerns about other peripheral European countries as weighing on financial conditions and confidence in the euro area. If other European countries responded by intensifying their fiscal consolidation efforts, the result would likely be slower growth in Europe and potentially a weaker global economic recovery. Some participants expressed concern that a crisis in Greece or in some other peripheral European countries could have an adverse effect on U.S. financial markets, which could also slow the recovery in this country. </p> <p> Developments in labor markets were positive over the intermeeting period. Nonfarm payrolls posted a modest gain in March, and the upturn in private employment was widespread across industries. Nevertheless, participants remained concerned about elevated unemployment, including high levels of long-term unemployment and permanent separations, which were seen as potentially leading to the loss of worker skills and greater needs for labor reallocation that could slow employment growth going forward. Moreover, information from business contacts generally underscored the degree to which firms' reluctance to add to payrolls or start large capital projects reflected uncertainty about the economic outlook and future government policies. A number of participants pointed out that the economic recovery could eventually lose traction without a substantial pickup in job creation. </p> <p> Participants cited a wide array of evidence as indications that underlying inflation remained subdued. The latest readings on core inflation--which exclude the relatively volatile prices of food and energy--were generally lower than they had anticipated. One participant noted that core inflation had been held down in recent quarters by unusually slow increases in the price index for shelter, and that the recent behavior of core inflation might be a misleading signal of the underlying inflation trend. However, a number of participants pointed out that the recent moderation in price changes was widespread across many categories of spending and was evident in measures that exclude the most extreme price movements in each period. In addition, survey measures of longer-term inflation expectations remained fairly stable, wage growth continued to be restrained, and unit labor costs were still falling; reports from business contacts also suggested that pricing power remained limited. Against this backdrop, most participants anticipated that substantial resource slack and stable longer-term inflation expectations would likely keep inflation subdued for some time. </p> <p> Participants' assessments of the risks to the inflation outlook were mixed. Some participants saw the risks to inflation as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. Others, however, saw the balance of risks as pointing to potentially higher inflation and cited pressures on commodity and energy prices associated with expanding global economic activity as an upside inflation risk; some also noted the possibility that inflation expectations could rise as a result of the public's concerns about the extraordinary size of the Federal Reserve's balance sheet in a period of very large federal budget deficits. While survey measures of longer-term inflation expectations had been fairly stable, some market-based measures of inflation expectations and inflation risk suggested increased concern among market partici-pants about higher inflation. To keep inflation expectations well anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to communicate clearly its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace. </p> <p> <strong>Committee Policy Action</strong><br> In the members' discussion of monetary policy for the period ahead, they agreed that no changes to the Committee's federal funds rate target range were warranted at this meeting. On balance, the economic outlook had changed little since the March meeting. Even though the recovery appeared to be continuing and was expected to strengthen gradually over time, most members projected that economic slack would continue to be quite elevated for some time, with inflation remaining below rates that would be consistent in the longer run with the Federal Reserve's dual objectives. Based on this outlook, members agreed that it would be appropriate to maintain the target range of 0 to percent for the federal funds rate. In addition, nearly all members judged that it was appropriate to reiterate the expectation that economic conditions--including low levels of resource utilization, subdued inflation trends, and stable inflation expectations--were likely to warrant exceptionally low levels of the federal funds rate for an extended period. As at previous meetings, a few members noted that at the current juncture, the risks of an early start to policy tightening exceeded those associated with a later start, because the scope for more accommodative policy was limited by the effective lower bound on the federal funds rate, while the Committee could be flexible in adjusting the magnitude and pace of tightening in response to evolving economic circumstances. In light of the improved functioning of financial markets, Committee members agreed that it would be appropriate for the statement to be released following the meeting to indicate that the previously announced schedule for closing the Term Asset-Backed Securities Loan Facility was being maintained. </p> <p> At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive: </p> <blockquote> "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to percent. The Committee directs the Desk to engage in dollar roll transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability." </blockquote> <p> The vote encompassed approval of the statement below to be released at 2:15 p.m.: </p> <blockquote> <p> "Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve. Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining and employers remain reluctant to add to payrolls. Housing starts have edged up but remain at a depressed level. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability. </p> <p> With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> In light of improved functioning of financial markets, the Federal Reserve has closed all but one of the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities; it closed on March 31 for loans backed by all other types of collateral." </p> </blockquote> <p> <strong>Voting for this action:</strong> Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Donald L. Kohn, Sandra Pianalto, Eric Rosengren, Daniel K. Tarullo, and Kevin Warsh. </p> <p> <strong>Voting against this action:</strong> Thomas M. Hoenig. </p> <p> Mr. Hoenig dissented because he believed it was no longer advisable to indicate that economic and financial conditions were likely to warrant "exceptionally low levels of the federal funds rate for an extended period." Mr. Hoenig was concerned that communicating such an expectation could lead to the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability, while limiting the Committee's flexibility to begin raising rates modestly in the near term. Mr. Hoenig believed that the target for the federal funds rate should be increased toward 1 percent this summer, and that the Committee could then pause to further assess the economic outlook. He believed this approach would leave considerable policy accommodation in place to foster an expected gradual decline in unemployment in the quarters ahead and would reduce the risk of an increase in financial imbalances and inflation pressures in coming years. It would also mitigate the need to push the policy rate to higher levels later in the expansionary phase of the economic cycle. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4773000 Wed, 23 Jun 2010 17:53:29 GMT fib_1618 http://forums.technicalwatch.com/post?id=4772997 <h3 class="prTime">For release at 9:15 p.m. EDT </h3><p>In response to the reemergence of strains in U.S. dollar short-term funding markets in Europe, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing the reestablishment of temporary U.S. dollar liquidity swap facilities.&nbsp;These facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers.&nbsp;The Bank of Japan will be considering similar measures soon.&nbsp;Central banks will continue to work together closely as needed to address pressures in funding markets. </p><p><strong>Federal Reserve Actions<br></strong>The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the Bank of Canada, the Bank of England, the European Central Bank (ECB), and the Swiss National Bank.&nbsp;The arrangements with the Bank of England, the ECB, and the Swiss National Bank will provide these central banks with the capacity to conduct tenders of U.S. dollars in their local markets at fixed rates for full allotment, similar to arrangements that had been in place previously.&nbsp;The arrangement with the Bank of Canada would support drawings of up to $30 billion, as was the case previously. </p> <p>These swap arrangements have been authorized through January 2011.&nbsp;Further details on these arrangements will be available shortly.</p><h3 class="prTime"> For release at 12:00 p.m. EDT </h3> <p> The Federal Open Market Committee has authorized re-establishment of its temporary U.S. dollar liquidity swap arrangement with the Bank of Japan. This arrangement is similar to the arrangements announced yesterday with the Bank of England, the European Central Bank, and the Swiss National Bank in that it will provide the Bank of Japan with the capacity to conduct tenders of U.S. dollars at fixed rates for the full allotment. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4772997 Wed, 23 Jun 2010 17:50:30 GMT fib_1618 http://forums.technicalwatch.com/post?id=4745739 <span style="font: 11px arial;">The Monster Employment Index rose by 1 point in May as a number of industries continued to step-up their online recruitment efforts. The annual growth rate during May was 14 percent (16 points), the highest year-over-year growth rate since April 2007, indicating the demand for labor is strengthening. <br><br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.com. <br><br> During May, online job availability rose in 12 of the Indexs 20 industry sectors and in 13 of the 23 occupational categories monitored. Index results for the past 13 months are as follows: <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">May 10</span></td> <td><span style="font: 11px arial;">Apr. 10</span></td> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> <td><span style="font: 11px arial;">Jul. 09</span></td> <td><span style="font: 11px arial;">Jun. 09</span></td> <td><span style="font: 11px arial;">May. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">134</span></td> <td><span style="font: 11px arial;">133</span></td> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">117</span></td> <td><span style="font: 11px arial;">118</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">The sustained expansion of job opportunities, especially in some large industries is encouraging, said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. While some of this increase can be attributed to seasonality, the notable improvement in annual growth rate is the highest since April 2007 and reflects a better job market heading into the summer months compared to this time last year. <br><br> <strong>Online Demand in Healthcare and Social Assistance Registers Largest Increases in May; Management; and Accommodation Edge Down</strong> <br> Online demand rose in 12 and remained flat in 4 of the 20 industries monitored by the Index. Healthcare and social assistance saw the strongest increase in online job availability, edging to its highest level since the mid-2008 period, most likely due to recruitment efforts geared toward students graduating from nursing as well as various healthcare technician and support programs. Arts, entertainment and recreation also edged up in May, continuing its six-month gradual expansion in online job opportunities. However current demand levels are only marginally higher than year-earlier levels suggesting consumer spending trends in this segment might not be strong enough to support broad increases in job creation. Meanwhile, manufacturing held steady while demand for transportation and warehousing workers grew for the fourth consecutive month. This recent relative improvement in both industries, and related occupations, coincides with heightened measures of production and commerce activity. <br><br> In contrast, real estate; accommodation and food services; management and agriculture edged down in May. <br><br> On an annual basis, mining; as well as utilities led all industries. Construction also continued its upward trend closely followed by transportation and retail trade. <br> <br> <strong>Healthcare Occupations Register Largest Gains in May; Management and Architecture Decline</strong> <br> Overall online demand for workers rose in 13 of 23 occupational categories in May, with healthcare practitioners and technical registering the largest gain on a month-over-month basis as reflected by the rise in online recruitment efforts for the healthcare industry as a whole. Apart from the healthcare related occupations, increased demand for white collar workers was generally limited to business and financial operations; and legal occupations. Online job demand for protective service and community and social service occupations also continued to edge up in May. <br><br> Meanwhile, management; architecture; computer and mathematical; all edged down in May. <br><br> Arts and design continued to lead all occupational categories in terms of year-over-year growth with a 25 percent annual rise in opportunities closely followed by transportation and warehousing which also continued its uptrend. Legal; and business and financial occupations also reported more online job offerings than a year ago. <br><br> <strong>Online Job Availability Rises in Six of Nine U.S. Census Bureau Regions in May</strong><br>During May, demand rose in six U.S. Census Bureau regions with Mountain registering the largest gain. On an annual basis, Middle Atlantic exhibited the most improvement. West North Central registered the most sluggish expansion in demand among all divisions, however still positive at 8 percent.<br><br> Among the 50 states and the District, 33 registered increased online job opportunities in May, with notably large gains in West region states like New Mexico, Washington, and Montana. On a year-over-year basis, Washington was one of the most rapidly growing states and currently has one of the highest per capita online job availability rates among all states. Other large states like New York and Pennsylvania also continued to exhibit robust annual growth in the Index. Meanwhile, District of Columbia, Mississippi, and South Dakota recorded negative annual growth.<br><br> <strong>Fifteen of The 28 Major U.S. Metro Markets Monitored By The Index Register Increases in May</strong> <br> During May, online recruitment activity rose in 15 major metropolitan markets, with Orlando registering the largest monthly gain. Although current levels of online job demand in this market remain well below the 2005 and 2006 periods, activity has nonetheless improved consistently over the past year. Demand remains thin but has improved over the year for blue-collar occupations like construction. Despite monthly declines, demand has been upbeat for occupations in primarily publicly-funded sectors including education, training, and library; and community and social services.<br><br> In contrast, Baltimore logged the largest monthly decline where online job availability declined following a steady 3-month rise. The largest declines in May were mainly for white-collar occupations, with the exception of computer and mathematical, which saw demand rise to a six month high.<br><br> Year-over-year, all 28 markets reported positive growth. Portland continued to exhibit the most substantial gains in online demand on an annual basis, while Cincinnati registered the most acceleration in annual growth rate, from 10 percent in April to 23 percent in May. In contrast, San Diego and Baltimore registered the most sluggish annual growth rate. </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4745739 Thur, 03 Jun 2010 13:32:17 GMT fib_1618 http://forums.technicalwatch.com/post?id=4705553 <span style="font: 11px arial;">The Monster Employment Index <span style="font-weight: bold;">rose eight points</span> in April as a number of industries initiated springtime recruitment efforts. The annual growth rate further accelerated, rising by 11 percent, the highest rate of increase since July 2007. <br> <br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.<br> <br> During April, online job availability rose in 17 of the Indexs 20 industry sectors and in 21 of the 23 occupational categories monitored. Index results for the past 13 months are as follows:<br> <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">Apr. 10</span></td> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> <td><span style="font: 11px arial;">Jul. 09</span></td> <td><span style="font: 11px arial;">Jun. 09</span></td> <td><span style="font: 11px arial;">May. 09</span></td> <td><span style="font: 11px arial;">Apr. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">133</span></td> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">117</span></td> <td><span style="font: 11px arial;">118</span></td> <td><span style="font: 11px arial;">120</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">The positive momentum in the Index is consistent with other economic indicators suggesting that we may be in the early stages of an economic recovery, said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. While most industries and occupations are showing increased demand for workers, public administration remains muted and below seasonal expectations as several state and local governments continue to face budgetary pressures. <br> <br> <strong>Online Demand in Mining; Construction Industry Sectors Register Largest Increases in April; Agriculture; and Information Edge Down</strong> <br> Mining, quarrying, oil and gas registered the largest gain among industries in April, as online demand jumped to its highest level in 18 months. This rise coincides with a rise in commodity prices for energy and raw materials as the economy recovers and demand for these products increases. Construction also rose notably, partly reflecting seasonal trends but also suggesting an improvement in the underlying demand for labor in this industry. Consumer-driven sectors like retail trade; and accommodation and food services continued to report large gains. The magnitude of increased demand for workers at this time of the year suggests that employers anticipate a continued positive trend for consumer spending in the near-term. Management of companies and enterprises; and professional services, two industries with relatively stagnant demand in March, registered month-over-month gains in April. <br> <br> Meanwhile, public administration registered a marginal rise in April, far short of historical precedent, further emphasizing the budgetary challenges faced by agencies at all levels of government. In contrast, real estate; information; and agriculture edged down in April. <br> <br> On an annual basis, mining; as well as real estate and rental and leasing led all industries. Construction was also up by 15 percent year-over-year but remains below pre-recessionary levels. <br> <br> <strong>Personal Care; Social Service; and Construction Occupations Register Largest Gains in April </strong> <br> Overall online demand for workers rose in 21 of 23 occupational categories in April, with personal care; social service; and construction occupations registering the largest gains on a month-over-month basis. <br> <br> The rise in construction and extraction occupations, potentially fueled by increased demand for select blue-collar workers and skilled tradesmen, coincides with the rise in online recruitment efforts for the construction industry as a whole. Management, engineering and legal occupations also registered a notable increase in April, contributing to the rise in the professional services industry. <br> <br> In contrast, demand fell in the military specific category, offsetting the expansion in hiring activity for public sector-related community and social service; and protective service workers. <br> <br> Arts and design led all occupational categories in terms of year-over-year growth with a 20 percent annual rise in opportunities closely followed by transportation and warehousing which continued its uptrend. Sales and related; education; and production occupations also reported more online job offerings than a year ago. <br> <br> <strong>Online Job Availability Rises in All U.S. Census Bureau Regions in April </strong><br> During April, demand rose in all U.S. Census Bureau regions with Mid Atlantic and New England registering the largest gains, both climbing 11 percent month-over-month. Meanwhile, East South Central registered the slowest expansion in demand among all regions in terms of three-month and annual growth rates, weighed down by muted recruitment in Mississippi. On an annual basis, Middle Atlantic continued to exhibit the most improvement. <br> <br> Among the 50 states and the District, 46 registered increased online job opportunities in April, with notable gains in Northeast states like Pennsylvania, Massachusetts, and New York. Pennsylvania and New York led all states by measure of year-on-year growth in online job demand, while Californias annual growth rate continued to improve in April. In contrast, the Dakotas exhibited the steepest annual declines. <br> <br> <strong>Twenty Seven of The 28 Major U.S. Metro Markets Monitored By The Index Register Increases in April; Orlando Remains Flat</strong> <br> During April, online recruitment activity rose in 27 major metropolitan markets, with Philadelphia registering the largest gain mostly due to expanded demand for white-collar professionals in management, the sciences, and education. Demand for blue-collar workers also improved in Philadelphia, with all occupational groups edging higher in April. <br> <br> Boston also expanded notably in April and opportunities have now grown by 50 percent, over a three-month period. This rise was largely fueled by expanding for a variety of occupational categories, but most notably for blue-collar and service workers in production; installation, maintenance, and repair; and food preparation and serving. <br> <br> Year-over-year, all 28 markets reported positive growth. Portland continued to exhibit the most substantial gains in online demand on an annual basis, while Houston exhibited the mildest annual rise. <br> <br> </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4705553 Thur, 06 May 2010 12:26:57 GMT fib_1618 http://forums.technicalwatch.com/post?id=4694222 Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve. Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining and employers remain reluctant to add to payrolls. Housing starts have edged up but remain at a depressed level. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability. <p> With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> In light of improved functioning of financial markets, the Federal Reserve has closed all but one of the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities; it closed on March 31 for loans backed by all other types of collateral. </p> <p> Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer run macroeconomic and financial stability, while limiting the Committees flexibility to begin raising rates modestly. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4694222 Wed, 28 Apr 2010 18:19:40 GMT fib_1618 http://forums.technicalwatch.com/post?id=4678304 <span><span><span>Foreclosure Alternatives Program Opens New Doors <a href="http://bit.ly/9rYNTR" rel="nofollow" target="_blank"><a href="http://bit.ly/9rYNTR" target="_blank">http://bit.ly/9rYNTR</a></a></span></span></span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4678304 Sat, 17 Apr 2010 22:52:11 GMT hiker http://forums.technicalwatch.com/post?id=4662218 <p> <strong>Developments in Financial Markets and the Federal Reserve's Balance Sheet<br> </strong>The Manager of the System Open Market Account reported on developments in domestic and foreign financial markets during the period since the Committee met on January 26-27, 2010. The net effect of these developments was that financial conditions had become modestly more supportive of economic growth. No market strains emerged in conjunction with the Federal Reserve's closing of nearly all of its remaining special liquidity facilities over the intermeeting period. On February 1, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, and the Term Securities Lending Facility were closed, and the Federal Reserve's temporary currency swap lines with foreign central banks expired. Financial markets also adjusted smoothly to the final offering of funds through the Term Auction Facility on March 8. </p> <p> The Manager noted that securitized credit markets had not shown substantial strain from the anticipated end of new credit extensions under the Term Asset-Backed Securities Loan Facility (TALF), which was scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities (CMBS) and on March 31 for loans backed by all other types of collateral.<a target="_blank" title="footnote 1" href="http://www.federalreserve.gov/monetarypolicy/fomcminutes20100316.htm#fn1">¹</a><a target="_blank" name="f1"> </a>Spreads on asset-backed securities remained tight while issuance--the bulk of which was being financed outside of TALF--continued to be fairly strong. While the cumulative volume of borrowing from the TALF had expanded fairly steadily in recent months, the volume of repayments of TALF loans had also risen as borrowers were able to secure funding from other sources on more favorable terms. As a result, the net amount of outstanding TALF credit had leveled out and would likely decline going forward as a result of continuing repayments. </p> <p> In his report on System open market operations, the Manager noted that over the period since the Committee had met in January, the Federal Reserve's total assets had risen to about $2.3 trillion, as an increase in the System's holdings of securities was partly offset by the declining usage of the System's credit and liquidity facilities. The Desk continued to gradually slow the pace of its purchases of agency mortgage-backed securities (MBS) and agency debt as it moved toward completing the Committee's previously announced asset purchases by the end of March. The Desk's purchases of agency MBS were on track to meet the targeted amount of $1.25 trillion, while its purchases of agency debt would likely cumulate to slightly less than $175 billion. The Desk continued to engage in dollar roll transactions in agency MBS securities to facilitate settlement of its outright purchases. There were no open market operations in foreign currencies for the System's account over the intermeeting period. By unanimous vote, the Committee ratified the Desk's transactions. Participants also agreed that the Desk should continue the interim approach of allowing all maturing agency debt and all prepayments of agency MBS to be redeemed without replacement. </p> <p> In addition, the Manager reported on recent progress in the development of reserve draining tools, including the initiation of a program for expanding the set of counterparties in conducting reverse repurchase agreements, and the staff gave a presentation on potential approaches for tightening the link between short-term market interest rates and the interest rate paid on reserve balances held at the Federal Reserve Banks. </p> <blockquote> Secretary's note: A staff memorandum was provided to members of the Board of Governors and Federal Reserve Bank presidents summarizing public comments on last December's <em>Federal Register</em> notice regarding the establishment of a term deposit facility, but that topic was not discussed at this meeting. </blockquote> <p> The staff also briefed the Committee on potential approaches for managing the Treasury securities held by the Federal Reserve. To date, the Desk had been reinvesting all maturing Treasury securities by exchanging those holdings for newly issued Treasury securities, but an alternative strategy would be to allow some or all of those Treasury securities to mature without reinvestment. Redeeming all of its maturing Treasury holdings would significantly reduce the size of the Federal Reserve's balance sheet over coming years and hence could be helpful in limiting the need to use other reserve draining tools such as reverse repurchase agreements and term deposits. Redemptions would also lower the interest rate sensitivity of the Federal Reserve's portfolio over time. Nevertheless, the initiation of a redemption strategy might generate upward pressure on market rates, especially if that measure led investors to move up their expected timing of policy firming. Participants agreed that the Committee would give further consideration to these matters and that in the interim the Desk should continue its current practice of reinvesting all maturing Treasury securities. </p> <p> <strong>Staff Review of the Economic Situation<br> </strong>The information reviewed at the March 16 meeting suggested that economic activity expanded at a moderate pace in early 2010. Business investment in equipment and software seemed to have picked up, consumer spending increased further in January, and private employment would likely have turned up in February in the absence of the snowstorms that affected the East Coast. Output in the manufacturing sector continued to trend higher as firms increased production to meet strengthening final demand and to slow the pace of inventory liquidation. On the downside, housing activity remained flat and the nonresidential construction sector weakened further. Meanwhile, a sizable increase in energy prices pushed up headline consumer price inflation in recent months; in contrast, core consumer price inflation was quite low. </p> <p> Available indicators suggested that the labor market might be stabilizing. Declines in private payrolls slowed markedly in recent months, and, in the absence of the snowstorms, private employment probably would have risen in February. The average workweek for production and nonsupervisory workers fell back in February after ticking up in January; however, the drop was likely due to the storms. The unemployment rate was unchanged at 9.7 percent in February, and the labor force participation rate inched up over the past two months. However, the level of initial claims for unemployment insurance benefits remained high. </p> <p> After increasing briskly in the second half of 2009, industrial production (IP) continued to expand, on net, in the early months of 2010, rising sharply in January and remaining little changed in February despite some adverse effects of the snowstorms. Recent production gains remained broadly based across industries, as firms continued to boost production to meet rising domestic and foreign demand and to slow the pace of inventory liquidation. Capacity utilization in manufacturing rose further, to a level noticeably above its trough in June, but remained well below its longer-run average. As a result, incentives for manufacturing firms to expand production capacity were weak. The available indicators of near-term manufacturing activity pointed to moderate gains in IP in coming months. </p> <p> Consumer spending continued to move up. Although sales of new automobiles and light trucks softened slightly, on average, in January and February, real outlays for a wide variety of non-auto goods and food services increased appreciably, and real outlays for other services remained on a gradual uptrend. In contrast to the modest recovery in spending, measures of consumer sentiment remained relatively downbeat in February and had improved little, on balance, since a modest rebound last spring. Household income appeared less supportive of spending than at the January meeting, reflecting downward revisions to estimates by the Bureau of Economic Analysis of wages and salaries in the second half of 2009. The ratio of household net worth to income was little changed in the fourth quarter after two consecutive quarters of appreciable gains. </p> <p> Activity in the housing sector appeared to have flattened out in recent months. Sales of both new and existing homes had turned down, while starts of single-family homes were about unchanged despite the substantial reduction in inventories of unsold new homes. Some of the recent weakness in sales might have been due to transactions that had been pulled forward in anticipation of the originally scheduled expiration of the tax credit for first-time homebuyers in November 2009; nonetheless, the underlying pace of housing demand likely remained weak. The slowdown in sales notwithstanding, housing demand was being supported by low interest rates for conforming fixed-rate 30-year mortgages and reportedly by a perception that real estate values were near their trough. </p> <p> Real spending on equipment and software increased at a solid pace in the fourth quarter of 2009 and apparently rose further early in the first quarter of 2010. Business outlays for motor vehicles seemed to be holding up after a sharp increase in the fourth quarter, purchases of high-tech equipment appeared to be rising briskly, and incoming data pointed to some firming in outlays on other equipment. The recent gains in investment spending were consistent with improvements in many indicators of business demand. In contrast, conditions in the nonresidential construction sector generally remained poor. Real outlays on structures outside of the drilling and mining sector fell again in the fourth quarter, and nominal expenditures dropped further in January. The weakness was widespread across categories and likely reflected rising vacancy rates, falling property prices, and difficult financing conditions for new projects. However, real spending on drilling and mining structures increased strongly in response to the earlier rebound in oil and natural gas prices. </p> <p> The pace of inventory liquidation slowed considerably in late 2009. As measured in the national income and product accounts, real nonfarm inventories excluding motor vehicles were drawn down at a much slower pace in the fourth quarter than in each of the preceding two quarters. Available data for January indicated a further small liquidation of real stocks early this year in the manufacturing and wholesale trade sectors. The ratio of book-value inventories to sales (excluding motor vehicles and parts) edged down again in January and stood well below the recent peak recorded near the end of 2008. Inventories remained elevated for equipment, materials, and, to a lesser degree, construction supplies, while inventories of consumer goods and business supplies appeared to be low relative to demand. </p> <p> Although rising energy prices continued to boost overall consumer price inflation, consumer prices excluding food and energy were soft, as a wide variety of goods and services exhibited persistently low inflation or outright price declines. On a 12-month change basis, core personal consumption expenditures (PCE) price inflation slowed in January 2010 compared with a year earlier, as a marked and fairly widespread deceleration in market-based core PCE prices was partly offset by an acceleration in nonmarket prices. Survey expectations for near-term inflation were unchanged over the intermeeting period; median longer-term inflation expectations edged down to near the lower end of the narrow range that prevailed over the previous few years. With regard to labor costs, the revised data on wages and salaries showed that last year's deceleration in hourly compensation was even sharper than was evident at the January meeting. </p> <p> The U.S. international trade deficit widened in December but narrowed slightly in January, ending the period a little larger. Both exports and imports rose sharply in December before pulling back somewhat the following month. For the period as a whole, the rise in exports was broadly based, with notable gains in aircraft and industrial supplies. Oil and other industrial supplies accounted for much of the increase in imports over the two months, while purchases of consumer products declined. </p> <p> Economic performance in the advanced foreign economies was mixed in the fourth quarter, with real gross domestic product (GDP) advancing sharply in Canada and Japan but rising only slightly in the euro area and the United Kingdom. That divergence appeared to have persisted in the first quarter, as indicators pointed to continued rapid economic growth in Canada and moderate expansion in Japan but somewhat anemic growth in Europe. In the emerging market economies, rebounding global trade, inventory restocking, and increased domestic demand supported generally robust fourth-quarter growth. Continued rapid expansion in China and several other Asian economies offset slowdowns elsewhere in the region. In Latin America, Mexican activity was buoyed by rising manufacturing and exports to the United States, while Brazil's economy again grew briskly. Headline consumer price inflation picked up around the world over the past two months, principally reflecting increases in food and energy prices. Excluding food and energy, consumer prices were generally more subdued. </p> <p> <strong>Staff Review of the Financial Situation</strong><br> The decision by the Federal Open Market Committee (FOMC) at the January meeting to keep the target range for the federal funds rate unchanged and to retain the "extended period" language in the statement was widely anticipated by market participants. However, investors reportedly read the statement's characterization of the economic outlook as somewhat more upbeat than they had anticipated, and Eurodollar futures rates rose a bit in response. The changes to the terms for primary credit and the Term Auction Facility that were announced on February 18 resulted in a small increase in near-term futures rates, but this reaction proved short lived, as the statement and subsequent Federal Reserve communications--including the Chairman's semiannual congressional testimony--emphasized that the modifications were technical adjustments and did not signal any near-term shifts in the overall stance of monetary policy. </p> <p> On balance, incoming economic data led investors to mark down the expected path of the federal funds rate over the intermeeting period. By contrast, yields on 2-year and 10-year nominal Treasury securities edged up, on net, over the period. Yields on Treasury inflation-protected securities (TIPS) rose at all maturities, reportedly buoyed by investor anticipation of heavier TIPS issuance and by reduced demand for TIPS by retail investors. Reflecting these developments, inflation compensation--the difference between nominal yields and TIPS yields for a given term to maturity--declined over the period, a move that was supported by the somewhat weaker-than-expected economic data and the publication of lower-than-expected readings on consumer prices. </p> <p> Conditions in short-term funding markets remained generally stable over the intermeeting period. Spreads between London interbank offered rates (Libor) and overnight index swap (OIS) rates at one- and three-month maturities stayed low, while six-month spreads edged down somewhat further. Spreads of rates on A2/P2-rated commercial paper and on AA-rated asset-backed commercial paper over the AA nonfinancial rate were also little changed at low levels. The Federal Reserve continued to taper its large-scale asset purchases and wind down the emergency lending facilities with no apparent adverse effects on financial markets or institutions. </p> <p> Broad stock price indexes rose, on net, over the intermeeting period, boosted in part by favorable earnings reports from the retail sector. Bank equity prices outperformed the broader equity markets. Option-implied volatility on the S&amp;P 500 index dropped back to post-crisis lows after increasing earlier in the period on concerns about Chinese monetary policy tightening and fiscal strains in Europe. Nonetheless, the gap between the staff's estimate of the expected real equity return over the next 10 years for S&amp;P 500 firms and the real 10-year Treasury yield--a rough measure of the equity risk premium--remained well above its average over the past decade. Yields on investment-grade corporate bonds, as well as their spreads over yields on comparable-maturity Treasury securities, were about unchanged over the intermeeting period; investment-grade risk spreads were near the levels that prevailed late in 2007. Yields and spreads on speculative-grade bonds edged down, and secondary-market prices of leveraged loans rose further. </p> <p> Overall, net debt financing by nonfinancial firms was about zero over the first two months of 2010, consistent with firms' weak demand for credit and banks' tight credit policies. Gross public equity issuance by nonfinancial firms was robust in the fourth quarter of 2009. Since the turn of the year, gross public equity issuance by nonfinancial firms slowed somewhat, while announcements of both new share repurchase programs and cash-financed mergers and acquisitions picked up. Public equity issuance by financial firms declined in January and February following very strong issuance in December, when several large banks issued equity to facilitate the repayment of capital received under the Troubled Asset Relief Program. Gross bond issuance by financial firms remained solid. The contraction in commercial mortgage debt accelerated in the fourth quarter. The dollar value of commercial real estate sales remained very low in February, and the share of properties sold at a nominal loss inched higher. The delinquency rate on commercial mortgages in securitized pools increased in January, and the delinquency rate on commercial mortgages at commercial banks rose in the fourth quarter. The percentage of delinquent construction loans at banks also ticked higher in the fourth quarter. Nonetheless, indexes of commercial mortgage credit default swaps changed little, on balance, over the intermeeting period. </p> <p> Since the January meeting, yields and spreads on agency MBS were little changed despite the continued tapering of the Federal Reserve's purchases of these securities, and residential mortgage interest rates and spreads were roughly flat. Net issuance of MBS by Fannie Mae and Freddie Mac remained subdued through the end of January. Consumer credit expanded in January, its first increase since January 2009. Despite low and stable spreads on consumer asset-backed securities (ABS), the amount of ABS issued in the first two months of the year was somewhat below that in the fourth quarter, reflecting the very weak pace of consumer credit originations late last year. The spread of credit card interest rates over two-year Treasury yields ticked up in January, while spreads on new auto loans declined slightly, on net, over the intermeeting period. Delinquency rates on credit card loans in securitized pools and on auto loans at captive finance companies remained elevated in January but were down a bit from their recent peaks. </p> <p> Total bank credit contracted substantially in January and February. Banks' securities holdings declined at a modest pace after several months of steady growth, and total loans on banks' books continued to drop. Commercial and industrial (C&amp;I) loans continued falling, as spreads of interest rates on C&amp;I loans over comparable-maturity market instruments climbed further in the first quarter and nonfinancial firms' need for external finance apparently remained subdued. Commercial real estate loans also posted significant declines. Household loans on banks' books contracted as well, in part because of a pickup in bank securitizations of first-lien residential mortgages with the government-sponsored enterprises in February. Consumer loans originated by banks declined, primarily reflecting a large drop in credit card loans. In contrast, other consumer loans--including auto, student, and tax advance loans--were roughly flat during January and February. </p> <p> M2 decreased in January, owing partly to a contraction in liquid deposits. Many institutions opted out of the Federal Deposit Insurance Corporation's Transaction Account Guarantee Program because of the higher fees associated with participation after year-end, reportedly driving depositors to transfer funds out of transaction accounts and into alternative investments outside of M2. M2 expanded in February, however, as liquid deposits resumed their growth. Small time deposits and retail money market mutual funds contracted in January and, to a lesser extent, in February, while currency declined a bit in January but advanced notably in February. The monetary base rose in both months, as the increase in reserve balances resulting from the ongoing large-scale asset purchases by the Federal Reserve more than offset the contraction in balances associated with the decline in credit outstanding under the System's liquidity and credit facilities. </p> <p> Movements in foreign financial markets since the January meeting were importantly influenced by concerns over fiscal problems in Greece. Spreads on Greek government debt relative to German bunds widened appreciably before falling back as press reports indicated that euro-area countries were discussing a possible aid package for Greece and the Greek government announced further deficit reduction measures. Spreads on debt issued by several other European countries followed a similar pattern over the intermeeting period. The Bank of England (BOE) and the European Central Bank (ECB) held rates steady during the period, and the BOE elected not to expand its Asset Purchase Facility, which reached its limit at the end of January. In early March, the ECB announced several steps to normalize its provision of liquidity. Equity prices in most foreign countries were up moderately since the January FOMC meeting. Likely reflecting the concerns about Greece as well as weak economic data in Europe, the dollar appreciated notably against sterling and the euro over the intermeeting period. However, the dollar declined against most emerging market currencies, which were buoyed by brightening growth prospects, leaving the broad trade-weighted value of the dollar down a bit since the January meeting. </p> <p> <strong>Staff Economic Outlook</strong><br> In the forecast prepared for the March FOMC meeting, the staff's outlook for real economic activity was broadly similar to that at the time of the January meeting. In particular, the staff continued to anticipate a moderate pace of economic recovery over the next two years, reflecting the accommodative stance of monetary policy and a further diminution of the factors that had weighed on spending and production since the onset of the financial crisis. The staff did make modest downward adjustments to its projections for real GDP growth in response to unfavorable news on housing activity, unexpectedly weak spending by state and local governments, and a substantial reduction in the estimated level of household income in the second half of 2009. The staff's forecast for the unemployment rate at the end of 2011 was about the same as in its previous projection. </p> <p> Recent data on consumer prices and unit labor costs led the staff to revise down slightly its projection for core PCE price inflation for 2010 and 2011; as before, core inflation was projected to be quite subdued at rates below last year's pace. Although increased oil prices had boosted overall inflation over recent months, the staff anticipated that consumer prices for energy would increase more slowly going forward, consistent with quotes on oil futures contracts. Consequently, total PCE price inflation was projected to run a little above core inflation this year and then edge down to the same rate as core inflation in 2011. </p> <p> <strong>Participants' Views on Current Conditions and the Economic Outlook</strong><br> In their discussion of the economic situation and outlook, participants agreed that economic activity continued to strengthen and that the labor market appeared to be stabilizing. Incoming information on economic activity received over the intermeeting period was somewhat mixed but generally confirmed that the economic recovery was likely to proceed at a moderate pace. On the positive side, recent data pointed to significant gains in retail sales, a substantial pickup in business spending on equipment and software, and a further expansion of goods exports. Moreover, the latest labor market readings had been mildly encouraging, with a considerable increase in temporary employment, especially in the manufacturing and information technology sectors. However, housing starts had remained flat at a depressed level, investment in nonresidential structures was still declining, and state and local government expenditures were being depressed by lower revenues. Moreover, consumer sentiment continued to be damped by very weak labor market conditions, and firms remained reluctant to add to payrolls or to commit to new capital projects. Participants saw recent inflation readings as suggesting a slightly greater deceleration in consumer prices than had been expected. In light of stable longer-term inflation expectations and the likely continuation of substantial resource slack, they generally anticipated that inflation would be subdued for some time. </p> <p> Participants agreed that financial market conditions remained supportive of economic growth. Spreads in short-term funding markets were near pre-crisis levels, and risk spreads on corporate bonds and measures of implied volatility in equity markets were broadly consistent with historical norms given the outlook for the economy. Participants were also reassured by the absence of any signs of renewed strains in financial market functioning as a consequence of the Federal Reserve's winding down of its special liquidity facilities. In contrast, bank lending was still contracting and interest rates on many bank loans had risen further in recent months. Participants anticipated that credit conditions would gradually improve over time, and they noted the possibility of a beneficial feedback loop in which the economic recovery would contribute to stronger bank balance sheets and so to an increased availability of credit to households and small businesses, which would in turn help boost the economy further. </p> <p> While participants saw incoming information as broadly consistent with continued strengthening of economic activity, they also highlighted a variety of factors that would be likely to restrain the overall pace of recovery, especially in light of the waning effects of fiscal stimulus and inventory rebalancing over coming quarters. While recent data pointed to a noticeable pickup in the pace of consumer spending during the first quarter, participants agreed that household spending going forward was likely to remain constrained by weak labor market conditions, lower housing wealth, tight credit, and modest income growth. For example, real disposable personal income in January was virtually unchanged from a year earlier and would have been even lower in the absence of a substantial rise in federal transfer payments to households. Business spending on equipment and software picked up substantially over recent months, but anecdotal information suggested that this pickup was driven mainly by increased spending on maintaining existing capital and updating technology rather than expanding capacity. The continued gains in manufacturing production were bolstered by growing demand from foreign trading partners, especially emerging market economies. However, a few participants noted the possibility that fiscal retrenchment in some foreign countries could trigger a slowdown of those economies and hence weigh on the demand for U.S. exports. </p> <p> Some labor market indicators displayed positive signals over the intermeeting period, including a pickup in temporary employment and increased job postings. Indeed, nonfarm payrolls might well have increased in February in the absence of weather disruptions. Nevertheless, participants were concerned about the scarcity of job openings, the elevated level of unemployment, and the extent of longer-term unemployment, which was seen as potentially leading to the loss of worker skills. Moreover, the downward trend in initial unemployment insurance claims appeared to have leveled off in recent weeks, while hiring remained at historically low rates. Information from business contacts and evidence from regional surveys generally underscored the degree to which firms' reluctance to add to payrolls or start large capital projects reflected their concerns about the economic outlook and uncertainty regarding future government policies. A number of participants pointed out that the economic recovery could not be sustained over time without a substantial pickup in job creation, which they still anticipated but had not yet become evident in the data. </p> <p> Participants were also concerned that activity in the housing sector appeared to be leveling off in most regions despite various forms of government support, and they noted that commercial and industrial real estate markets continued to weaken. Indeed, housing sales and starts had flattened out at depressed levels, suggesting that previous improvements in those indicators may have largely reflected transitory effects from the first-time homebuyer tax credit rather than a fundamental strengthening of housing activity. Participants indicated that the pace of foreclosures was likely to remain quite high; indeed, recent data on the incidence of seriously delinquent mortgages pointed to the possibility that the foreclosure rate could move higher over coming quarters. Moreover, the prospect of further additions to the already very large inventory of vacant homes posed downside risks to home prices. </p> <p> Participants referred to a wide array of evidence as indicating that underlying inflation trends remained subdued. The latest readings on core inflation--which exclude the relatively volatile prices of food and energy--were generally lower than they had anticipated, and with petroleum prices having leveled out, headline inflation was likely to come down to a rate close to that of core inflation over coming months. While the ongoing decline in the implicit rental cost for owner-occupied housing was weighing on core inflation, a number of participants observed that the moderation in price changes was widespread across many categories of spending. This moderation was evident in the appreciable slowing<s> </s>of inflation measures such as trimmed means and medians, which exclude the most extreme price movements in each period. </p> <p> In discussing the inflation outlook, participants took note of signs that inflation expectations were reasonably well anchored, and most agreed that substantial resource slack was continuing to restrain cost pressures. Measures of gains in nominal compensation had slowed, and sharp increases in productivity had pushed down producers' unit labor costs. Anecdotal information indicated that planned wage increases were small or nonexistent and suggested that large margins of underutilized capital and labor and a highly competitive pricing environment were exerting considerable downward pressure on price adjustments. Survey readings and financial market data pointed to a modest decline in longer-term inflation expectations over recent months. While all participants anticipated that inflation would be subdued over the near term, a few noted that the risks to inflation expectations and the medium-term inflation outlook might be tilted to the upside in light of the large fiscal deficits and the extraordinarily accommodative stance of monetary policy. </p> <p> <strong>Committee Policy Action</strong><br> In their discussion of monetary policy for the period ahead, members agreed that it would be appropriate to maintain the target range of 0 to 1/4 percent for the federal funds rate and to complete the Committee's previously announced purchases of $1.25 trillion of agency MBS and about $175 billion of agency debt by the end of March. Nearly all members judged that it was appropriate to reiterate the expectation that economic conditions--including low levels of resource utilization, subdued inflation trends, and stable inflation expectations--were likely to warrant exceptionally low levels of the federal funds rate for an extended period, but one member believed that communicating such an expectation would create conditions that could lead to financial imbalances. A number of members noted that the Committee's expectation for policy was explicitly contingent on the evolution of the economy rather than on the passage of any fixed amount of calendar time. Consequently, such forward guidance would not limit the Committee's ability to commence monetary policy tightening promptly if evidence suggested that economic activity was accelerating markedly or underlying inflation was rising notably; conversely, the duration of the extended period prior to policy firming might last for quite some time and could even increase if the economic outlook worsened appreciably or if trend inflation appeared to be declining further. A few members also noted that at the current juncture the risks of an early start to policy tightening exceeded those associated with a later start, because the Committee could be flexible in adjusting the magnitude and pace of tightening in response to evolving economic circumstances; in contrast, its capacity for providing further stimulus through conventional monetary policy easing continued to be constrained by the effective lower bound on the federal funds rate. </p> <p> Members noted the importance of continued close monitoring of financial markets and institutions--including asset prices, levels of leverage, and underwriting standards--to help identify significant financial imbalances at an early stage. At the time of the meeting the information collected in this process, including that by supervisory staff, had not revealed emerging misalignments in financial markets or widespread instances of excessive risk-taking. All members agreed that the Committee would continue to monitor the economic outlook and financial developments and would employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> In light of the improved functioning of financial markets, Committee members agreed that it would be appropriate for the statement to be released following the meeting to indicate that the previously announced schedule for closing the Term Asset-Backed Securities Loan Facility was being maintained. The Committee also discussed possible approaches for formulating and communicating key elements of its strategy for removing extraordinary monetary policy accommodation at the appropriate time. No decisions about the Committee's exit strategy were made at this meeting, but participants agreed to give further consideration to these issues at a later date. </p> <p> At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive: </p> <blockquote> "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to complete the execution of its purchases of about $1.25 trillion of agency MBS and of about $175 billion in housing-related agency debt by the end of March. The Committee directs the Desk to engage in dollar roll transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability." </blockquote> <p> The vote encompassed approval of the statement below to be released at 2:15 p.m.: </p> <blockquote> <p> "Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability. </p> <p> With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. </p> <p> The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. </p> <p> In light of improved functioning of financial markets, the Federal Reserve has been closing the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral." </p> </blockquote> <p> <strong>Voting for this action:</strong> Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Donald L. Kohn, Sandra Pianalto, Eric Rosengren, Daniel K. Tarullo, and Kevin Warsh. </p> <p> <strong>Voting against this action:</strong> Thomas M. Hoenig. </p> <p> Mr. Hoenig dissented because he believed it was no longer advisable to indicate that economic and financial conditions were likely to warrant "exceptionally low levels of the federal funds rate for an extended period." Mr. Hoenig was concerned that communicating such an expectation could lead to the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability. Accordingly, Mr. Hoenig believed that it would be more appropriate for the Committee to express its anticipation that economic conditions were likely to warrant "a low level of the federal funds rate for some time." Such a change in communication would provide the Committee flexibility to begin raising rates modestly. He further believed that making such an adjustment to the Committee's target for the federal funds rate sooner rather than later would reduce longer-run risks to macroeconomic and financial stability while continuing to provide needed support to the economic recovery. </p> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4662218 Tue, 06 Apr 2010 18:18:23 GMT fib_1618 http://forums.technicalwatch.com/post?id=4660205 April 5, 2010 Liz Ann Sonders on the V-shaped recovery:<br><br>text and video for this interview -<br><br><a href="http://finance.yahoo.com/tech-ticker/article/461290/Yes%2C-Its-a-V-Shaped-Recovery%3A-Risk-of-Double-Dip-%22Relatively-Low%22%2C-Liz-Ann-Sonders-Says" target="_blank">http://finance.yahoo.com/tech-ticker/article/461290/Yes%2C-Its-a-V-Shaped-Recovery%3A-Risk-of-Double-Dip-%22Relatively-Low%22%2C-Liz-Ann-Sonders-Says</a><br><br> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4660205 Mon, 05 Apr 2010 14:28:42 GMT hiker http://forums.technicalwatch.com/post?id=4655005 <span style="font: 11px arial;">The Monster Employment Index (MEI) had a monthly rise of one point in March, as employers continued to expand hiring efforts at the end of the first quarter. The annual growth rate in the MEI accelerated in March, with the current online demand level six percent above where it was a year ago.<br><br> The Monster Employment Index is a monthly gauge of U.S. online job demand based on a real-time review of millions of employer job opportunities culled from a large representative selection of corporate career Web sites and job boards, including Monster.<br> <br> During March, online job availability rose in 12 of the Index's 20 industry sectors and in 13 of the 23 occupational categories monitored. Index results for the past 13 months are as follows:<br> <br> </span><br> <table align="center"> <tbody> <tr> <td><span style="font: 11px arial;">Mar. 10</span></td> <td><span style="font: 11px arial;">Feb. 10</span></td> <td><span style="font: 11px arial;">Jan. 10</span></td> <td><span style="font: 11px arial;">Dec. 09</span></td> <td><span style="font: 11px arial;">Nov. 09</span></td> <td><span style="font: 11px arial;">Oct. 09</span></td> <td><span style="font: 11px arial;">Sept. 09</span></td> <td><span style="font: 11px arial;">Aug. 09</span></td> <td><span style="font: 11px arial;">Jul. 09</span></td> <td><span style="font: 11px arial;">Jun. 09</span></td> <td><span style="font: 11px arial;">May. 09</span></td> <td><span style="font: 11px arial;">Apr. 09</span></td> <td><span style="font: 11px arial;">Mar. 09</span></td> </tr> <tr> <td><span style="font: 11px arial;">125</span></td> <td><span style="font: 11px arial;">124</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">115</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">119</span></td> <td><span style="font: 11px arial;">121</span></td> <td><span style="font: 11px arial;">114</span></td> <td><span style="font: 11px arial;">117</span></td> <td><span style="font: 11px arial;">118</span></td> <td><span style="font: 11px arial;">120</span></td> <td><span style="font: 11px arial;">118</span></td> </tr> </tbody> </table> <br> <span style="font: 11px arial;">"We're encouraged by the positive uptick in the Index in the past two months," said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. "The Index results may be a signal that companies intend to start hiring again. While the labor market continues to be challenging for those looking for work, we are encouraged to see early signs of what may be a return to consistent job growth." <br> <br> <strong>Real Estate, Rental and Leasing; Construction Register Large Monthly Gains in Online Job Demand in March; Public Administration and Information Edge Down</strong><br> Online recruitment activity rose in 12 of the 20 NAICS industries. Construction led all industries on a month-over-month basis with an 11-point gain in March. Transportation and warehousing rose for the second consecutive month. This rise in online job demand coincides with an increase in most shipping/transportation metrics in recent months, including those for port activity, trucking, and rail freight. Meanwhile, online job opportunities in retail trade registered an eight-point increase in March with employers stepping up hiring after a seasonal lull at the beginning of the first quarter. This rise demonstrates a steady recovery in hiring activity in this sector, also reflected by a rise in retail sales figures issued by the Department of Commerce. Manufacturing also continued to rise in the Index and is up by two percent annually, coinciding with a rise in durable goods orders, again reported by the Department of Commerce. <br> <br> Public administration; information; and professional, scientific, and technical services saw a decline in online job demand in March, in contrast with the usual initiation of recruitment cycles that have historically been seen in early springtime. <br> <br> On an annual basis, mining; as well as real estate and rental and leasing led all industries, with online demand in real estate edging to its highest level in more than one year. While existing home sales volumes have seen a downward trend in the past three months, there is evidence that non-real estate rental and leasing activity is on a potential upswing. Still, online job availability continues to indicate a weak labor market for the sector relative to the 2007 and 2008 periods. <br> <br> <strong>Thirteen Occupational Categories See Increases in Online Job Availability in March; Four Remain Flat; Community and Social Service; and Protective Service Decline</strong><br> In March, online hiring demand rose in construction; and transportation occupations as reflected by growth in their industries as a whole. Health care and social assistance also registered a gain in March to reach its highest level in five months in the Index with the healthcare practitioners group exhibiting the most notable expansion in opportunities. Meanwhile, occupations in the sales and related sector held steady in March, suggesting that the gains in the broader retail trade industry were not only limited to sales positions, but also managerial and technical occupations. <br> <br>In contrast, online demand for occupations related to community and social service; protective service; and business edged down in March. <br> <br> Transportation and warehousing led all occupational categories in terms of year-over-year growth with a 19 percent annual rise in opportunities closely followed by sales and related which continued to remain above year-earlier levels. Business and financial; education; and production occupations also reported more online job offerings than a year ago. <br> <br> <strong>Online Job Availability Rises in Four of Nine U.S. Census Bureau Regions in March</strong><br>During March, demand rose in four U.S. Census Bureau regions while two remained flat. Pacific and Mid Atlantic registered the largest gains, climbing three points each. West South Central remained unchanged in March, but displays the largest three-month rise among all divisions. On an annual basis, Middle Atlantic exhibited the most improvement. <br> <br> Among the 50 states and the District, 18 registered increased online job opportunities in March, led by Delaware and North Carolina. The Midwest states of Nebraska and North Dakota noted steep monthly declines. New York led all states by measure of year-on-year growth in online job demand, while California's annual growth rate displayed notable improvement in March. Nevada continues to exhibit the steepest annual decline. <br> <br> <strong>All 28 Major U.S. Metro Markets Monitored By The Index Register Increases in March</strong><br> During March, online recruitment activity rose in all major metropolitan markets, with Orlando, Portland and Cleveland registering the largest gains. Opportunities in Orlando expanded notably not only for blue-collar and service functions like transportation and material moving; and food preparation and serving, but also for professional occupations like business and financial operations; and IT. <br> <br> Meanwhile, California's major metro markets continued their steady recovery, with Los Angeles, San Diego, and San Francisco all edging up in March, and exhibiting double-digit growth from a three-month view. The California metros saw increased opportunities in occupations related to construction and extraction, as well as high tech occupations like life, physical, and social sciences; and business. <br> <br> On a year-over-year basis, 25 of the 28 markets reported positive growth, while four remained flat. Portland and Orlando continued to note the most substantial gains in online demand on the year, while Washington, DC exhibited the steepest annual decline, weighed down by a deceleration in public sector recruitment as well as private sector recruitment for professionals in occupations like legal and IT. </span> <p>Forum: <a href="http://forums.technicalwatch.com/?forum=9747">Fundamentally Speaking</a> http://forums.technicalwatch.com/post?id=4655005 Thur, 01 Apr 2010 13:07:11 GMT fib_1618