Oil Prices and Winter Weather Slow U.S. Economic Growth

Domestic economic output grew at an annual rate of 1.8% in the first quarter of 2011 after expanding at a rate of 3.1% in the previous quarter. The slower growth was attributed to higher oil prices and winter weather.

Higher oil prices led to decreased profits for businesses and less discretionary income for consumers. Winter weather also took its toll by closing many businesses and delaying construction on new homes.

New York Times, April 29, 2011

U.S. Economy Grew 1.8% in First Quarter

Oil and Gas Prices Continue to Rise

Commodity prices, particularly oil and gasoline, have shown significant increases year-to-date. These prices will continue to be closely watched as the Federal Reserve enters their final phase of bond-buying. Following the end of the program in June, the focus is expected to turn to a debate on the federal funds rate, which has remained at 0 - 0.25% since December 2008.

Wall Street Journal, April 28, 2011
Crude-Oil, Gasoline Prices Climb

U.S. FOMC Meeting Focuses on Inflation

The Federal Reserve announced it would continue its bond buying program through June as scheduled. The inflation outlook is not expected to warrant an increase in interest rates immediately following the end of QE2. However, commodity prices have steadily been pushing higher and the Fed raised their inflation forecast from 1.3% to 1.7% in 2011. The Fed did not foreshadow the economy reaching its expected inflation rate of 2% until as late as 2013 which would probably not call for a raise in the interest rate in the near future. The Federal Reserve's next scheduled FOMC meeting will be in July.

Wall Street Journal, Wednesday, April 27, 2011
Fed Signals Intent to Complete Bond Buying

Watch Ben Bernanke's FOMC press conference:
Fed Chairman Ben Bernanke's FOMC Press Conference

Treasury Market Awaits Federal Reserve Announcements

Treasury trading volume was significantly lower on Monday as investors awaited announcements by the Federal Reserve on policy decisions.

Closing Treasury yields on Monday were the following:

1-year note 0.206%

3-year note 1.119%

5-year note 2.069%

10-year note 3.365%

30-year note 4.456%

Tuesday, April 26, 2011

Treasurys Rise in Quiet Before Bernanke

Wall Street Journal Markets Data

Quantitative Easing

The Federal Reserve will meet on Tuesday and Wednesday of this week. The spotlight will be on QE2 and the Fed is expected to announce continuance of its bond-buying program through June.

Monday, April 25, 2011
Fed Searches for Next Step

U.S. Energy Prices

President Obama's focus was on gas prices today in his weekly radio address. High gas prices have affected inflation and President Obama says he wants to eliminate tax subsidies to gas companies to ease the burden on U.S. consumers.

New York Times, April 23, 2011
The Politics and Government Blog of The Times: Weekly Address

Dollar Weakens

It is no surprise that the dollar weakened this week against its basket of currencies in the ICE Index. Relief for the U.S. will not come until the budget debate is under wraps and the debt ceiling is decided on.

Concurrently, Europe and the euro continue to strengthen. The ECB’s announcement of an increase in rates has added momentum for the region. Additionally, the Eurozone’s control of Greece, Ireland, and Portugal, all under the care of the EU – IMF aid fund, has calmed the zone’s worries of a widespread contagion.

Wall Street Journal, April 22, 2011

Dollar Tumbles to Precrisis Levels