ECONOMIC AND FINANCIAL HIGHLIGHTS FEDERAL RESERVE BALANCE SHEET Assets & Liabilities 2-3 LABOR MARKETS Southeast Payroll Employment 4 REAL ESTATE Housing Starts 5 Mortgage Rates 6 MANUFACTURING Industrial Production 7 INTEREST RATES Treasury Yields 8 INFLATION Breakeven Inflation Rates 9 MARCH 20, 2013
FEDERAL RESERVE BALANCE SHEET Between March 6 and March 13, the Federal Reserve s balance sheet increased by $56.9 billion. The overall size of the balance sheet reached $3.2 trillion. 3,300 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 Federal Reserve Assets (Uses of Funds) $ billions Currency Swaps Agency Debt & MBS Lending to Nonbank Credit Markets Short-Term lending to Financials Other Treasuries 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Source: Federal Reserve Board through March 13, 2013 ADDITIONAL DETAIL Treasuries increased by $8.2 billion and agency debt and MBS increased by $44.9 billion.. According to the New York Fed s tentative outright Treasury operation schedule, The desk plans to purchase approximately $45 billion in Treasury securities over the month of March. 2
FEDERAL RESERVE BALANCE SHEET Between March 6 and March 13, bank reserve balances with the Federal Reserve increased by $57.3 billion, while Treasury deposits with the Federal Reserve decreased by $20.5 billion. As of March 13, 2013, bank reserves held at the Federal Reserve were $1.8 trillion. 3,300 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 Treasury SFP Other Federal Reserve Liabilities (Sources of Funds) $ billions Banks Reserve Balances Currency in Circulation 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Source: Federal Reserve Board SFP=Supplemental Financing Program through March 13, 2013 ADDITIONAL DETAIL Reverse repurchase agreements with foreign officials and international accounts decreased by $1.3 billion. Other nonreserve deposits, which include balances of international and multilateral organizations with accounts at the New York Fed, such as the International Monetary Fund, United Nations, International Bank for Reconstruction and Development (World Bank), the special checking account of the Exchange Stabilization Fund (where deposits from monetizing Special Drawing Rights would be placed), and balances of a few U.S. government agencies (such as Fannie Mae and Freddie Mac). Reserves increased by $20.2 billion. 3
LABOR MARKETS Sixth District states added a net 21,200 payrolls in January 2013, up from 18,600 in December 2012. Louisiana had the largest decline in payrolls of any state in the nation in January, shedding 12,500 payrolls. Alabama also lost payrolls, dropping 3,300. Mississippi added 4,600 payrolls, and Tennessee added 7,600. Georgia saw 9,400 new payrolls in January, while Florida carried the bulk of the Sixth District s gain with 15,400 new payrolls in January. 100 80 60 40 20 0-20 -40-60 -80 Contributions to Change in Net Payrolls, by Sixth District State Thousands of payrolls, SA Tennesse Louisiana Florida Total Sixth District Payrolls Mississippi Georgia Alabama -100 10 11 12 13 Source: BLS through January 2013 21.2 4
Whitney Mancuso, Ext. 8917 REAL ESTATE The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that total housing starts increased nearly 1 percent from January to February. 2,500 2,000 U.S. Housing Starts thousands, SAAR Total Single Family Single-family starts increased a half percent on a monthly basis. Total starts increased 27.7 percent on a year-over-year basis and single-family starts increased 31.5 percent. 1,500 1,000 500 917 618 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 through February 2013 Sources: U.S. Census Bureau and the Department of Housing and Urban Development 5
INTEREST RATES According to Freddie Mac s Primary Mortgage Market Survey (PMMS), as of March 14, the average rate for a 15- year fixed-rate mortgage rose 3 basis points (bps) to 2.79 percent. The average rate for a 30- year fixed-rate mortgage increased 11 bps to 3.63 percent. 7 6 5 4 Mortgage Rates weekly average, percent 3 2 06 07 08 09 10 11 12 13 Sources: Freddie Mac, Primary Mortgage Market Survey (PMMS) through March 14, 2013 ADDITIONAL DETAIL When the PMMS began its weekly measure of the average 30-year fixed-rate mortgage in April 1971, rates stood at 7.33 percent. The average 30-year fixed-rate mortgage reached its series high of 18.63 percent on October 8, 1981, and its series low of 3.31 on November 22, 2012. When the weekly measure of the average 15-year fixed-rate mortgage began in August 1991, rates stood at 8.77 percent. The average 15- year fixed-rate mortgage reached its series high of 8.89 percent on December 15, 1994, and its series low of 2.63 percent on November 22, 2012. 6
MANUFACTURING Overall industrial production increased by 0.7 percent in February, while manufacturing output rose by 0.8 percent. The output of utilities increased by 1.7 percent, while production at mines declined by 0.3 percent. The production of durable goods rose 1.2 percent in February. Output in the motor vehicles and parts category rose 3.6 percent after having fallen 4.9 percent in January. The production of business equipment rose 2.5 percent. Index 120 110 100 90 80 70 60 50 Production Indices for Selected Series Seasonally adjusted Total IP Manufacturing Durable Goods Production Business equipment Motor vehicles and parts 109.5 98.0 107.7 103.0 99.5 40 2007 2008 2009 2010 2011 2012 2013 Source: Federal Reserve Board through February 2013 7
INTEREST RATES U.S. Treasury yields were little changed between the January and March FOMC meetings, with the 10-year note at 1.95 percent and the 30-year bond at 3.19 percent on March 20. 3.5 3.0 2.5 U.S. Treasury Yields daily, percent January FOMC 2.1 1.8 1.5 2.0 1.2 1.5 0.9 1.0 0.6 0.5 0.3 0.0 0.0 1-Nov 15-Nov 29-Nov 13-Dec 27-Dec 10-Jan 24-Jan 7-Feb 21-Feb 7-Mar 21-Mar Source: Bloomberg 10-yr (LHS) 30-yr (LHS) 5-yr (RHS) 2-yr (RHS) through March 20, 2013 8
INFLATION Inflation expectations from the TIPS market remain on the higher end of readings seen during the last two years. The Barclays 5-year/5-year forward breakeven inflation rate is currently at 2.83 percent, down 3 bps from a week ago. But it remains about 40 bps higher than the average daily rate seen between January and August 2012, when expectations consistently fluctuated between 2.3 percent and 2.6 percent. (Note: The breakeven inflation rate is a measure of expected inflation derived from nominal Treasury securities and their real counterparts inflationprotected TIPS securities.) 3.25 3.00 2.75 2.50 2.25 2.00 Barclays 5-year/5-year forward breakeven inflation rate percent Jan. Aug. 2012 average: 2.44% January FOMC 1.75 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Source: Barclays Capital through March 20, 2013 2.83 9