Lara Rhame
Lara Rhame
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The dollar is largely unchanged. In these holiday markets, I think releases like tomorrow's personal income data are going to be more critical than the backward-looking GDP report.
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The dollar had positive momentum going into the numbers but the numbers themselves, I don't think were enough to push the dollar higher. What we've seen... is the dollar moving on the back of the bond market. The 10-year rose to a new cyclical high again.
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The economy's performance since Sept. 11 has been extremely resilient and based on unshakeable consumer confidence.
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The euro can go pretty far -- when currencies correct, they have a tendency to do that. But I don't see the recent move as dramatic or unexpected, and I don't think it's out of line with fundamentals.
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The underlying state of the economy is on weak footing, and we're going to need further stimulus to keep the recovery on track.
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This is more an unwind of positions betting against the yen. It's been very surprising how fast this correction has been. The speed of the move has shocked a lot of people.
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The detail looks pretty solid, with new orders up, employment up. The dollar should react positively to this.
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The markets have probably been too quick to connect the dots from the current slew of good data straight to a Fed rate hike,
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The markets are trying to put this data in the context of how scared the Fed is by it. It's very difficult to see exactly what the Fed views as a continuation of last year's trend of broadly declining price pressure and what the Fed sees as a substantial decline.
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The market reacted exactly the way they wanted it to, which was to flatten the yield curve. I think the point is clear: Policy makers are going to do whatever they can to help the Fed. The rate cuts that the Fed is putting through are only hitting the short curve; they're only psychological.
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You can really think of productivity as magic fairy dust to sprinkle over growth to allow growth without inflation. That's really the way the Fed sees it.
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The manufacturing sector has been so battered that it's too early to say the troubles are over in that sector. But we're seeing the economy making some kind of a bounce after contracting in April. We have to see now whether or not that continues.
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The manufacturing data certainly are positive, but the employment data specifically reinforce the notion that domestic growth is not going be enough to create many jobs.
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Inflation is looking more benign outside of the energy sector.