However, the focus of the session was on FOMC. Federal Reserve officials left interest rates unchanged and said they still expect to raise borrowing costs at a “gradual” pace while watching to see how the global economy and markets impact the U.S. outlook. The Federal Open Market Committee is “closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook,” the central bank said in a statement Wednesday following a two-day meeting in Washington. The Fed omitted a line from the previous statement in December saying the risks to the outlook were “balanced.”
Chair Janet Yellen and her Fed colleagues, explaining their unanimous decision to leave the target range for their benchmark federal funds rate at 0.25 percent to 0.5 percent, said that recent information “suggests that labor market conditions improved further even as economic growth slowed late last year.” Reiterating the interest-rate outlook from the December statement, the FOMC said Wednesday that it “expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.”
On Thursday Durable Goods Orders and Unemployment Claims figures were released. Orders for durable, or long-lasting, goods fell 5.1% in December, the Commerce Department said Thursday. The drop came after a 12.4% plunge in transportation orders and was worse than the 1.5% forecasted decline in the headline. Excluding transportation, orders fell 1.2% in December. So-called core capital-goods orders fell 4.3%.
Separate report showed that in the week ending January 23, the advance figure for seasonally adjusted initial claims was 278,000, a decrease of 16,000 from the previous week's revised level. Analysts were expecting decrease to 281,000. The 4-week moving average was 283,000, a decrease of 2,250 from the previous week's revised average.
Friday's US session was marked by GDP, Chicago PMI and Revised Consumer Sentiment figures. Real gross domestic product increased at an annual rate of 0.7% in the fourth quarter of 2015, missing forecasts on 0.8% increase. In the third quarter, real GDP increased 2.0%. The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and federal government spending that were partly offset by negative contributions from private inventory investment, exports, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The University of Michigan final index of sentiment dropped to 92 from 92.6 in December, backtracking from a preliminary January reading of 93.3. The median projection in a Bloomberg survey called for 93. “Most of the downward revisions that occurred in late January were due to stock market declines, reflected in the erosion of household wealth as well as weakened prospects for the national economy,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
The Chicago Business Barometer bounced back sharply in January, increasing 12.7 points to 55.6 from 42.9 in December, the highest pace of growth in a year. Analysts were expecting smaller incline to 45.6. The latest increase followed extreme weakness in the fourth quarter, with the Barometer averaging 47.7, the weakest quarterly growth since Q3 2009. The three month trend remained depressed at 48.7, up only slightly from 47.7 in December.
This week markets will be looking at:
ISM Manufacturing PMI (Monday 16:00)
ADP Non-Farm Employment Change (Wednesday 14:15)
ISM Non-Manufacturing PMI (Wednesday 16:00)
Unemployment Claims (Thursday 14:30)
Non-Farm Employment Change/Unemployment Rate (Friday 14:30)
Trade Balance (Friday 14:30)
