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Investing Specialists

Slower Income Growth Lurking

A shrinking work week and lackluster hourly wage growth amid higher inflation could be pinching consumers, writes Morningstar's Bob Johnson.

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Most worldwide equity markets showed modest gains this week, generally ranging from 0.3% to 2.4%, with the broad developed-market indexes doing the worst and emerging-markets doing the best. A much softer tone from two U.S. Federal Reserve speakers this week, including Chair Janet Yellen, eased any remaining fears of the Fed raising rates in April. This was in contrast to a more hawkish set of speakers last week, who caused the market to break its five-week winning streak.

A weak consumption report for February and huge downward revisions to the January consumption growth rates indicate that some of this week's caution may have been warranted. Soft auto data at the end of the week indicated that consumption growth may not accelerate in March. This generally weaker view helped depress commodities, which fell about 2% for the week and dropped the rate on the U.S. 10-year Treasuries to 1.79%, down from 1.9% the prior week.

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Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.