BAML: The Taper Continues

This morning’s job number was not bad enough to forestall the taper, and the weakness of January was likely transitory according to the Bank of America Merrill Lynch US Economics team (emphasis mine)…

 On balance, this does not change our view for Fed policy or our optimistic outlook for the economy this year. We are penciling in a slowdown in growth in 1Q to 2.0%, in part due to poor weather conditions, but expect a rebound in 2Q to 3.3%. We think the Fed will look past the recent soft jobs data, especially in the context of strength elsewhere in the economy. Other indicators which are less sensitive to weather, such as consumer and business surveys, have continued to improve. We expect Fed Chair Yellen to stay the course at her testimony next week, reiterating her view that the economy is healing, allowing for a measured pace of tapering.

DYI Comments: NONE