US: Economy back on track - ANZ

The research team at ANZ explains that after the Fed expressed a belief during the week that the softness in Q1 activity was transitory, all eyes were on Friday’s labour market figures to see if this view was going to be upset at the first hurdle and that was not the case.

Key Quotes

“The data was consistent with the labour market having strong momentum and spare capacity continuing to be absorbed. Speeches from six Fed officials also did little to upset the apple cart (although that is probably not a surprise given the close proximity to the FOMC statement). Fed Chair Yellen and Vice Chair Fischer didn’t even comment on monetary policy, while Williams, Bullard, Evans and Rosengren largely stuck to the script with markets largely ignoring their comments on tight labour markets; normalisation of the balance sheet later this year; and the belief inflation will return to 2%. Nevertheless, pricing for a June Fed hike is ticking higher.”