GDP is the big question after continued mixed signals from the economy. The April jobs data was very strong, but was not overwhelming and was followed by several weak economic reports.
The ADP jobs data comes out this week and the official May jobs report is due Friday. The ECB meets Thursday and is expected to lower rates and announce some type of bond buying program similar to what we saw here from the FED. Watch these two reports.
Even though stock markets are hitting all time highs, with Europe and China slowing, I don’t think the U.S. can bounce back to GDP near 4% late in the year as some forecasts indicate.
In addition to the drag I think Obamacare is placing on the economy, we now have a new variable with the recently announced EPA regulations that will increase electricity prices. While these new rules do not kick in immediately, increasing regulation and rising production and living costs will not cause any company to increase investment and hire people.
Last week’s dip in the 10 year yield to 2.43% was short lived and the 10 year is back to 2.60% in just 4 days after spending nearly 3 weeks under 2.50%. The quick last move was short covering, but the fact that they moved this low could indicate coming weakness in the economy.