1. Economic Trends

2. GDP Q2-2011 through Q2-2016 September 2016
Second quarter annual growth rate of real gross domestic product (GDP) up 0.3% from second measure:
Third = 1.4%
Second = 1.1%
Advance = 1.2%
The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment. These were partly offset by negative contributions from private inventory investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased .

3. US Unemployment Rate 2005 - 2016 September 2016
Total nonfarm payroll employment rose by 156,000 in September. This year job growth has averaged 178,000 per month after averaging 229,000 per month in 2015.
The number of unemployed persons was little changed at 7.9 million in September, and the unemployment rate was 5.0 percent, an increase of 0.1 percent.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million in September. These individuals accounted for 24.9 percent of the unemployed.
The civilian labor force participation rate was unchanged at 62.9 percent.

4. Inflation
September 2016
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.5 percent before seasonal adjustment.
The Trimmed Mean PCE inflation rate for August was an annualized 1.6 percent. According to the BEA, the overall PCE inflation rate for August was 1.7 percent, annualized, while the inflation rate for PCE excluding food and energy was 2.2 percent.

5. Curve Steepness October 2016 Spread – 10Yr CMT vs 2 Year CMT
10/31/ %
11/30/ %
12/31/ %
1/31/ %
2/29/ %
3/31/ %
4/30/ %
5/31/ %
6/30/ %
7/31/ %
8/31/ %
9/30/ %
10/11/ %
From 8/31 to 10/11, the two year has risen .03% while the ten year has risen .15%. A steepening of the yield curve in this manner indicates expectations of higher inflation in the future.

6. Credit Spreads September 2016
Moody's Liquidity-Stress Index (LSI) fell for the sixth consecutive month in September, to 7.1% from 7.5% in August.
In September, speculative-grade liquidity (SGL) rating upgrades outnumbered downgrades for the fourth straight month, at 11 to 5.
Although US economic forecasts for 2016 and 2017 have been trimmed, growth has remained warm enough to prevent defaults in the energy and mining sectors from spreading to speculative-grade companies in other industries.
Moody's Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken.

7. Credit Spreads – TED Spread 3 month LIBOR rate minus 3 month T-Bill interest rate
October 2016
Ted spread is the price difference between three-month futures contracts for US Treasuries and three-month contracts for Eurodollars having identical expiration months.
Historically, the spread trades between 10 and 50 basis points.
Credit markets are adjusting to new regulations which went into effect on October 14, which has led to a contraction in available dollar-based funding. Demand for prime money market funds, portfolios primarily made up of corporate debt such as commercial paper and certificates of deposit, is waning ahead of the imposition of rules shortening their weighted average maturity from 90 to 60 days.