Economic Trends. GDP Q2-2011 through Q2-2016 2 July 2016 Second quarter annual growth rate of real gross domestic product (GDP): Advance = 1.2% The increase.

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Presentation transcript:

Economic Trends

GDP Q through Q July 2016 Second quarter annual growth rate of real gross domestic product (GDP): Advance = 1.2% The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

US Unemployment Rate July 2016 Total nonfarm payroll employment increased by 255,000 in July, 75k more than expected. June was revised from 287k to 292k and May from 11k to 24k. The net revision was +18k. In the household survey, July employment rose 420k and the labor force rose 407k, leaving the unemployment rate unchanged at 4.9%. Job Growth: Health Care +43,000 Business Services +70,000 Financial +18,000 Retail +15,000 The civilian labor force participation rate edged up slightly to 62.8 percent.

Inflation July 2016 CPI-U increased 0.2 percent in June on a seasonally adjusted basis. The index for all items less food and energy has risen 2.3 percent over the last 12 months, above the annual rate of 1.9 percent over the last 10 years. The food index declined in June, while the indexes for energy and for all items less food and energy rose. The Trimmed Mean PCE inflation rate for June was an annualized 1.0 percent. The overall PCE inflation rate for June was 1.2 percent, annualized.

Blue Chip Rate Forecast August

Curve Steepness 6 July 2016 Spread – 10Yr CMT vs 2 Year CMT 10/31/151.41% 11/30/151.27% 12/31/151.21% 1/31/161.18% 2/29/ % 3/31/161.05% 4/30/161.06% 5/31/160.97% 6/30/ % 7/31/160.89% 8/10/160.81%

Credit Spreads 7 July 2016 Moody's Liquidity-Stress Index (LSI) eased to 8.1% in July from 8.7% in June. The latest reading marks the four consecutive monthly decline as the number of companies with Moody's lowest liquidity rating, SGL-4, decreased due to a mix of bankruptcies and liquidity rating upgrades. Moody's Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken. Meanwhile, Moody's forecasts that the one-year US speculative-grade default rate will peak at 6.5% in January 2017 before easing ease to 5.3% in June from 5.5% this past July.