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News from money markets
Monthly reports for February included new home sales, which set a new post-recession high, and existing home sales, also higher, and a higher CPI, Durable goods were down for the 4th time in 6 months, and the University of Michigan sentiment indicator improved from its first March reading, but has continued to back off its January post-recession high.
The dollar was mixed overall in N.Y. trade on Friday, though the USD index did fall marginally to 96.99 lows. The revised Q4 U.S. GDP data missed the mark and put some pressure on the greenback early on, the greenback later made inroads against the yen CAD and pound. EUR-USD peaked near 1.0950 into the London close on short covering interest, while USD-JPY recovered from a brief move under 119.00. USD-CAD was capped just over 1.25 on noted domestic selling interest, though the pairing later moved over 1.2590 as oil prices slipped in afternoon trade.
This morning's final revision to 4th quarter 2014 GDP actually contained 3 pieces of forward-looking data. One was positive, one negative, and one mixed.
Let's start with the positive: gross domestic income. GDI is the opposite side of the accounting ledger from GDP, and it is generally thought that GDP over time resolves in the direction of GDI. In particular note the 2006 and 2007 divergences between GDP and GDI. Today we finally got 4th quarter GDI, and it was +3.0%, higher than GDP:
Let’s start by looking at the US, where housing news was very positive: existing home sales increased 1.2% and new home sales were up 7.8% (both figures are M/M). On the negative side were durable goods orders, which decreased 1.4%. This latest contraction continues a recent trend of disappointing headline numbers:
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