Monthly Review - May 2014

US Nonfarm Payrolls were at 288k in April, above the consensus of 215k. February and March figures were revised up to 222k and 203k, respectively from 197k and 192k previously reported; unemployment rate was down to 6.3% from 6.7% seen in March. Consensus forecast jobless rate at 6.6%. The sharp drop in jobless rate was attributed by the sharp drop in workforce in April. After an additional 503k civilians entering the workforce, 806k left in April.

The Contenders. Two presidential candidates are going to participate in the presidential election scheduled on July 9th 2014. Joko Widodo has announced Jusuf Kalla as his running mate while Prabowo Subianto has announced Hatta Rajasa as his running mate. The presidential election issue has been limiting the JCI movement so far, and this is expected to remain throughout June until the election is past.

Clashes In Ukraine. Clashes continued in Ukraine between the government and the separatists. While the Russian troops have been ordered to return to base. Elsewhere in Crimea, the country moved a step further towards integration with Russia. Crimea opted to use ruble as its currency.

 

Exit Strategy. FOMC has US$45bn left in their stimulus to remove and this mid-June meeting is expected to see another US$10bn. This will bring the monthly bond purchases to US$35bn. Based on the FOMC minutes issued in May, the FOMC has started discussing on how to exit the easy monetary policy and start raising rates. No decisions have been taken so far but this signals that higher rates have started showing on the horizon, even if it still has to wait for 2H15 to come true. Stanley Fischer will be joining the FOMC panel in the upcoming meeting. The former Bank of Israel governor was nominated by the US Senate.

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