ALM First Financial Advisors

Economic Indicators

Economic Release Actual Expected Prior

01/12 Advance Retail Sales 0.1% 0.3% 0.4% Rev

01/12 Retail Sales Less Autos -0.2% 0.3% 0.2%

01/13 Import Price Index (MoM) -0.1% -0.1% 0.8% Rev

01/18 PPI Ex Food & Energy (MoM) 0.3% 0.1% 0.1%

01/18 PPI Ex Food & Energy (YoY) 3.0% 2.8% 2.9%

01/18 Producer Price Index (MoM) -0.1% 0.1% 0.3%

01/18 Producer Price Index (YoY) 4.8% 5.1% 5.7%

01/19 Consumer Price Index (MoM) 0.0% 0.1% -0.0%

01/19 Consumer Price Index (YoY) 3.0% 3.0% 3.4%

01/19 CPI Ex Food & Energy (MoM) 0.1% 0.1% 0.2%

01/19 CPI Ex Food & Energy (YoY) 2.2% 2.2% 2.2%

01/19 Housing Starts 657K 680K 685K

01/20 Existing Home Sales 4.61M 4.65M 4.39M Rev

01/20 Existing Home Sales MoM 5.0% 5.2% 3.3% Rev

01/25 FOMC Rate decision 0.25% 0.25% 0.25%

01/26 Durable Goods Orders 3.0% 2.0% 4.3% Rev

01/26 Durables Ex Transportation 2.1% 0.9% 0.5% Rev

01/26 New Home Sales 307K 321K 314K Rev

01/26 New Home Sales MoM -2.2% 1.9% 2.3% Rev

01/27 3Q 2011 GDP Price Index 0.4% 1.9% 2.6%

01/27 3Q T 2011 GDP QoQ (Annualized) 2.8% 3.0% 1.8%

01/27 PCE Core (QoQ) 1.1% 0.9% 2.1%

01/27 Personal Consumption 2.0% 2.4% 1.7%

01/30 PCE Core (YoY) 1.8% 1.8% 1.7%

01/30 PCE Deflator (YoY) 2.4% 2.3% 2.6% Rev

01/31 Consumer Confidence 61.1 68.0 64.8 Rev

02/01 ISM Manufacturing 54.1 54.5 53.1 Rev

02/02 Continuing Claims 3437K 3535K 3567K Rev

02/02 Initial Jobless Claims 367K 371K 379K Rev

02/03 Average Hourly Earnings YoY 1.9% 1.9% 2.1%

02/03 Change in Nonfarm Payrolls 243K 140K 203K Rev

02/03 ISM Non-Manufacturing 56.8 53.2 53.0

02/03 Unemployment Rate 8.3% 8.5% 8.5%

Market Commentary

January 9, 2009

Treasury prices are mixed again this morning with prices on the front end higher and prices on the back-end lower. Three month LIBOR declined nine basis points to 1.26%, the biggest daily decline in three weeks. The decline is leading some to believe that all of the excess liquidity pumped into the system by the central banks and the near-zero percent returns for Funds is pushing some banks to take more risk.

The story of the day is the government’s monthly employment report, and as expected, the data was dismal. Nonfarm payrolls for December declined by 524,000, and the November figure was revised downward to a 584,000 decline, capping the worse year of job losses since 1945. If we look at the last three months of the year, the economy lost 1.5 million jobs. The only sectors that saw job increases were health care and the government, but if state local governments continue to struggle with declining tax bases and higher borrowing costs, government jobs should suffer as well (unless President Obama institutes a large-scale government hiring program). The unemployment rate jumped to 7.2%, and the U-6 unemployment rate, which includes discouraged workers, marginally attached workers, and people working part-time for economic reasons, rose to 13.5%. The Bureau of Labor Statistics (BLS), who is responsible for all of this data, sometimes refers to the U-6 figure as the “real” unemployment rate.

The average workweek declined by .2 hours to 33.3 hours, which is the largest monthly drop since 1982. People working less typically means that they are making less, and when you combine that with fact that consumer savings rates are increasing, it doesn’t bode well for consumer spending, and for that matter, GDP.

Jason Haley
Fixed Income Strategist