US: Economy clouded by the shutdown saga - Westpac
Analysts at Westpac, point out that this week’s data flow has been very light in the US, thanks to the continuing government shutdown, which is now the longest in history.
“Though the shutdown’s real economy impact should be negligible, assuming the government is opened soon and back pay is provided to workers, the mounting backlog of delayed data releases means that the real economy view will remain opaque for some time – potentially even beyond the FOMC’s 19-20 March meeting. This is presumably a key reason the market remains unwilling to price in a significant chance of further tightening by the FOMC in 2019, even as investors become increasingly optimistic over US/ China trade relations, equity markets rally back from their lows and, as made clear by Federal Reserve Governor Quarles overnight, the US’ real economy remains “very strong”.”
“As evinced by remarks from President Draghi this week, this tension between real economy strength and the long list of global risks is not only at play in the US but also Europe. In both locales, policy setting in 2019 will increasingly occur in the moment, depending on data and risks to hand.”