Wall Street Webcasting Presents Wells Fargo Securities: “Gradual Economic Improvement, Low Volatility and Tight Spreads Define the First Half of 2014.”
NEW YORK--(BUSINESS WIRE)--Wall Street Webcasting presents exclusive video of Rich Gordon, the highly-regarded Fixed Income Market Strategist of Wells Fargo Securities (NYSE: WFC). This week, Gordon discusses economic data from the first half of 2014.
It is important to take a look back at the results of economic data throughout the past 6 months. After a shaky start to the year, the economy has made consistent improvements. Over the last 3 months, the Nonfarm Payrolls Report has had an average of 234,000 jobs being added. The unemployment rate has dropped to 6.3%. There was a revision to the GDP that showed a contraction during the first quarter. The Wells Fargo economic analysts believe that this may have mostly been due to the extreme winter weather. The second quarter showed improvement, and it has been steadily improving ever since.
As the U.S. heads towards the end of its zero interest rate policy, many analysts, traders, and investors were expecting a rise in interest rates. They began the year short of futures contracts and were hoping on intermediate and long yields to rise. Instead, a sharp rally in yields occurred, and many shorts were forced to cover their positions. On May 29, 2014, the 10-Year Treasury Yield reached an intra-day low of 2.40%, causing losses for many investors; however, it has since climbed higher.
A few weeks ago, the ECB loosened its own monetary policy by lowering its version of the Fed funds rate to 15 basis points and also set deposit rates to -10 basis points, which essentially forces money to be withdrawn from cash deposit accounts and put into places with potential upswing. They also set up a lending facility that its banks can borrow from with very favorable circumstances, but under the condition that they only use that money to make loans.
The S&P has been trending higher for a straight year. It reached new highs since the middle of May. Although there has been a moderate decline in the upward momentum here recently, Wells Fargo analysts see no cause for a strategic short of the stock market. On the down side to all of this, there has been more than a 4% increase in oil prices during the last couple of weeks, along with several days of profit taking in the stock markets, due to the current situation in Iraq.
To hear a more in-depth explanation of the economic recovery, please tune into Wells Fargo Securities latest video. Please visit the following link to view the video: