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US jobs numbers come in high enough to prompt Fed rate hike

The BLS released the latest employment numbers for the US, the last piece of major economic data before the Fed meets next week to decide on whether to raise interest rates. The numbers were good enough, and now a rate hike is all but certain.

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Tomorrow’s jobs number would have to terrible to prevent a Fed hike

Tomorrow’s jobs number would have to terrible to prevent a Fed hike

Tomorrow, the BLS will release the February jobs numbers for the US economy. This is the last piece of major US economic data before the Fed meets next week to decide on US monetary policy. All indications are that the number will be good. The ADP employment report released yesterday showed 298,000 private sector jobs added to the economy, the best showing in some 11 years. And January’s report showed non-farm payrolls rising by 227,000.

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Oil drops below $50 a barrel on oversupply

Oil drops below $50 a barrel on oversupply

For the first time in 3 months, oil dropped below $50 a barrel after crude inventories were shown rising by 8.2 million barrels last week. Inventory levels are now at their highest levels since the US government began recording data in 1982.

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Some thoughts on systematic central bank policy errors

A recent post by Matthew Klein on central banks over at FT Alphaville that dovetails with some of the themes I have been writing about here at Credit Writedowns for the past decades is what preciputated this post. Let me summarize my thesis and tell you why it matters. Here are the bullet points – focused here mostly on the US.

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Great risk to Turkey as relations with Germany sour

Turkey is in the middle of a major political row with Germany. In the wake of the attempted coup d’tat last year, Turkish President Erdogan wants to change its constitution to give the President more power. And because the likely vote will be close and so many Turks live in Germany and the Netherlands, Erdogan’s allies want to campaign in those countries.

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The US trade deficit is at a five-year high

This morning data from the US Commerce Department showed the US trade deficit in January at its highest level since March 2012. The numbers were not unexpected as the $48.5 billion deficit was bang on economist estimates.

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The coming Fed hike and the problems with its communication

Now the market are putting the odds of a hike next week at 96%, a virtual certainty. But the very fact that Yellen and her compatriots commented on the likelihood of a rate hike at a specific meeting has been the subject of consternation.

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Financial conditions have eased enough to get the Fed to hike in March

For years, many Fed watchers have claimed that the Federal Reserve has a secret third mandate beyond inflation and full employment. And this past February 21st, for the first time a Fed President said directly that, indeed, the Fed does have a third mandate: financial stability.

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The yield curve is still flatter than at anytime since the last recession

The yield curve is still flatter than at anytime since the last recession

If you look at the difference in yield between 2 and 10-year treasuries, the numbers in the last year are the lowest since 2008, when the US economy was in a recession.

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Jobless claims are at their lowest level in 44 years

Jobless claims are at their lowest level in 44 years

It’s not the actual level of jobless claims that matters. It’s the change from one year to the next, due to the income shock associated with job losses.

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Personal income data shows the US economy on track

Personal income data shows the US economy on track

Yesterday’s release of the Personal Income and Outlays data showed personal income increasing 0.4% in January, ahead of expectations. The numbers demonstrate that the US economy continues to expand at a solid if unspectacular pace. The decline in personal consumption growth is the challenge for continued growth in the US economy with the Fed set to hike rates.

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ISM Manufacturing Index at 57.7

ISM Manufacturing Index at 57.7

The ISM manufacturing index showed the US manufacturing sector expanding at a faster rate, with the index hitting 57.7% in February. Importantly, the three major subindices – new orders, production and employment – all showed robust expansion.

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