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Weekly Update – March 16, 2018

  • Media commentary seemingly continued to cue equity markets as major U.S. indexes finished the week lower. Gold lost ground and oil climbed. The U.S. Treasury note finished the period at approximately 2.85%.

  • Trade continued to catch attention during the week. U.S. Trade Representative Robert Lighthizer met with trade officials from the EU and Japan, though no clarity surfaced about the exact procedure for tariff exemptions. The matter will be further addressed this week during the Group of 20 (G20) summit in Buenos Aires.

  • News broke that Secretary of State Rex Tillerson was fired by President Trump, though the decision appears to have been made prior to public notification. The move came after months of speculation and reports of tension between the two men. Trump cited a difference in mindset between them.

  • Headline CPI increased 0.2% month-to-month in February, in line with consensus and lower than January’s hotter-than expected 0.5% month-over-month gain. The gauge rose 2.2% year-to-year, faster than January’s 2.1% year-over-year increase. Core CPI was also up 0.2% month-to-month, in line with expectations.

  • The NFIB’s index of small-business optimism came in at 107.6 for February, which the release noted was one of the strongest readings in the series’ 45-year history. It added that the results incorporated a jump in small-business owners increasing capital outlays and raising compensation; and said for the first time since 2006, “taxes” received the fewest votes as the number one problem for small business.

  • The NY Fed’s Empire manufacturing survey was stronger than expected in March, coming in at 22.5 vs. consensus for 15.0. The release highlighted robust business activity, with data pointing to strong growth in orders and shipments. It noted, though, that input price increases continued to accelerate. However, respondent firms remained optimistic in terms of the six-month outlook.

  • By comparison, the March manufacturing survey from the Philadelphia Fed came in slightly lighter than forecast. The release observed, though, that new orders and shipments improved. It added that in response to a special question, nearly two thirds of firms reported labor shortages, with a higher percentage indicating skill mismatches between requirements and available labor.

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