8D Consent 2017 0905 - Laserfiche WebLink

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Domestic economic data remains indicative of slow growth. The economy is likely at or near full employment, consumer confidence is strong, manufacturing indicators are indicative of modest expansion,and housing trends remain favorable. Looking ahead,a potential boost in fiscal stimulus could provide a further tailwind to economic growth. GDP grew by 1.4%in the first quarter, following growth of 2.1%in the fourth quarter.We expect modest economic growth of about 2.0%-2.5% for the full year 2017. Economic Update    The Federal Open Market Committee (FOMC) raised the fed funds target rate by 25 basis points to a range of 1.00%- 1.25% at the June 13-14 meeting. However, the FOMC statement indicated that the stance of monetary policy remains accommodative. The FOMC also noted that economic activity has been rising moderately and job gains have been solid,but inflation has recently declined. Nevertheless, the FOMC expects inflation to stabilize around 2.0% over the medium term. The Committee expects to begin trimming the Fed’s balance sheet later this year. The Fed’s updated Summary of Economic Projections reflects downward revisions to the Fed’s median unemployment rate projections for this year and future years,as well as a downward revision to the Fed’s median 2017 inflation forecast. The updated projections suggest that the Fed anticipates the labor market to tighten further over the coming years without much impact on inflation. The Fed still expects the fed funds rate to reach 1.4%by the end of this year (which implies one more rate hike before year-end) and 3.0% over the longer-run. Treasury yields increased modestly in June, led by the 5-year note. The 2-year and 10-year Treasury yields both increased by ten basis points month-over-month, while the 5-year Treasury yield increased 14 basis points. The move higher in domestic yields occurred late in the month, coinciding with hawkish comments from ECB President Draghi. His comments also provided a catalyst for sovereign yields in Germany and Japan to move higher.On a year-over- year basis, Treasury yields have increased meaningfully, with the 2-year Treasury yield up 80 basis points and the 10- year Treasury yield up 83 basis points. The Federal Reserve has raised the fed funds target rate by 25 basis points three times in the past year. 3212