"While the Fed will claim to be focused on domestic policy concerns alone, the removal of QE may complicate its policy shift via knock-on effects from abroad"
-Rick Reider of investing firm BlackRock
Following a disappointing ISM manufacturing report, trade balance and non-farm payrolls it will be interesting to listen to Janet Yellen's first testimony later this week. It seems the world's largest economy is entering a transition phase– as the Fed starts to taper its stimulus programme. However, it is hard say whether the latest set of fundamental data is due to the bad weather conditions or they are more persistent. Thursday's retail sales can provide some insight on what is happening with the largest part of the U.S. economy– consumer spending. According to analysts' projections, the U.S. data could be weaker for some time, however, in general the outlook for this years speaks in favour of economic acceleration. Though, risks cannot be fully ignored. This week, Yellen can either signal a pause in the pace of monthly tapering or she can enhance the forward guidance further.
Meanwhile, U.S. companies added 113,000 jobs in January, well below the average monthly gain over the previous year, while unemployment rate fell further down to 6.6%, the Bureau of Labor Statistics reported Friday. That is the lowest jobless rate since 2008. Employment increased in such sectors as construction and manufacturing, but dropped in retail and government.
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