Global Economy
Review: United States economic data remains consistent with modest growth. Home builder conditions rose to their highest level in six years and housing starts and home sales continued to trend higher. Retail sales rose +0.9%. The Institute for Supply Management (ISM) Manufacturing conditions survey improved Payroll jobs growth was modest but unemployment fell 7.8%.
Underlying inflationary pressures remained benign with core inflation of 1.9%, which allows for more stimulus from the Federal Reserve (Fed). The big news was that the Fed commenced an open-ended quantitative easing (QE3) program a the commitment to purchase US$40 billion worth of mortgage backed securities each month until the outlook for the labour market improves. The Fed also extended its low interest rate guidance into 2015.