Bonds dipped after the productivity report as unilt labour cost played more than robust gains in the productivity however the market did the right thing 'soared' because it is the productivity that was behind AG arguments fornon-inflationary growth to continue... this reassurance that basic model is intact will help us move forward to that 3480 -3500 resistance and SPZ 1444.. yesterday 1414 was establised as a support now 1444 is the new target and 3480-3520 the new objective on Comp, interesting index would be DOT IIX to watch..<<Unit labor costs, closely watched for signs of inflation since they are the largest part of total production costs, rose 2.5 percent, following a decline of 0.2 percent in the previous three-month period and exceeding market expectations of a 1.5 percent rise. Still, compared to a year earlier, unit labor costs were up only 0.1 percent, the report said.
Inflation-wary Federal Reserve policymakers, who have credited strong productivity growth for helping the U.S. economy to grow faster with lower rates of inflation, are likely to be reassured by the numbers.
They next meet to discuss interest rate strategy on Nov. 15 amid expectations they will keep credit costs on hold.
Financial markets showed little reaction to the report, but inflation-sensitive bond prices dipped slightly on the larger-than-expected rise in unit labor costs.
``It's suggesting this structural change playing out in the U.S. economy seems to still be continuing,'' said Paul Ferley, assistant chief economist at Bank of Montreal/Harris Bank.>> |
