The US average hourly earnings declined by 0.1% in August but keeps growing year-over-year. The unemployment rate shrank by 0.2% last months as compared to July. This gives investors hope for economic recovery in the USA.
The consumer price index (CPI) increased by 0.6% (m/m) in August. This is the highest growth since 2009. The PPI is up by 0.2% as well.
Consequently, the rate of inflation is growing but is within the limit.
The following speaks in favor of supporting US T-bonds:
1. The manufacturing PMI declined a little in August (even though exerts had anticipated growth). The index is around the lowest level in 3 years.
2. The Federal Reserve promised to leave the key interest rate near the zero level (0.25%) till mid 2015.
As you know, the Federal Reserve announced another round of quantitative easing (QE3). It is planned to spend $40 bn a month on bond purchases every single months until the rate of unemployment is down below 6%. In general, this step is expected to support US T-bonds.
The chart below, courtesy of , reflects the current state of affairs in the market of US bonds. The experts keep monitoring the market.
