The overall risk of the economy remains relatively moderate as treasury spreads remain historically narrow and the CFNAI 3-month average sits below zero. However, highlighting this week’s report were a better than expected increase in jobs and a lower than expected decrease in durable goods orders.
Comments on this week’s report:
- After the 10-year minus 3-month treasury spread inverted last week, spreads widened this week with the 10-year minus 2-year increasing to 0.18% and the 10-year minus 3-month increasing to 0.07%. Despite the increase in the spreads, the treasury yield curve still remains relatively flat.
- The U.S. added 196,000 jobs in March yet its year-over-year growth only increased from 1.70% to 1.71%. Meanwhile the unemployment rate holds steady at 3.80%. Both indicate a low level of risk.
- Wage growth, as measured by average hourly earnings, recognized a drop in its year-over-year growth rate as it decreases from 3.48% to 3.33%. However, wage growth still indicates a low level of risk.
- Durable goods orders dropped 1.6% in February and reduced its year-over-year growth from 8.13% to 1.81%. Despite the relatively large drop in durable goods orders year-over-year rate, the index tends to be somewhat volatile and still indicates a low level of risk.