- Janet Yellen, Fed Chair
The number of initial jobless claims rose by 5,000 to 320,000 last week, surprising markets to the upside, as consensus forecast stood for 322,000. The Philly Fed's manufacturing index rocketed to 9.0 in February from –6.3 a month earlier, moving back to the positive territory. A gauge of general activity, shipments and new orders improved, pointing to a growth following weather-related tepid growth in the first two months of 2014. Additionally, a leading indicator from the Conference Board, which includes 10 economic indicators, advanced to 0.5% last month, posting the biggest gain since November. A report showed that an improvement in the labour market, surging home values and record-high stock prices are pushing household wealth, hence bolstering the largest part of the U.S. economy– household spending.
Earlier this week Janet Yellen said the U.S. central bank is preparing for a first rate hike. This announcement pushed the U.S. Dollar higher, while U.S. government bonds inched lower. The Fed now projects interest rates to rise to 1% by the end of the next year, up from 0.75% expected in December. Regarding the short-term rates, they are projected to stand at 2.25% by the end of 2015, significantly above the previous forecast of 1.75%. Some of the analysts even believe the Fed will make a first move in the spring, before the middle of 2015.
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