A steady Fed kept rates unchanged after its meeting this week – noting low inflation and reasonable growth. The Fed targets a personal consumption price index rate of 2%. It currently sits well below this target with a March rate of 1.5%. At the end of the week, the jobs report far surpassed expectations with a multi-decade low 3.6% unemployment rate. Typically, with unemployment this low, inflation starts to pick up. With wage growth reported at 3.2%, consumer spending may ultimately turn this tide. In Venezuela, the opposition party came close but was not successful in ousting Maduro whose leadership has been marred by controversy and economic turmoil.
With nearly 80% of U.S. companies reporting earnings by the end of the week, the year-over-year decline in earnings may be smaller than projected. Stronger than anticipated earnings in healthcare and creative plans announced by companies like Facebook have propelled U.S. stocks to new territory and highs. Small cap stocks outpaced their larger counterparts both for the week and month as it appears a trade deal with China will be sealed soon. Rates rose slightly as stronger economic data diminished prospects for a Fed rate cut. In response bond prices fell slightly. Oil prices dropped last week despite the Venezuela turmoil and expiration of the sanctions on Iran oil exports.
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