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The Small Business Optimism Index of the National Federation of Independent Business fell in March to 92.5 from 94.3 in the prior month. The March decline is the first after six monthly gains since September 2011.
Although the percentage of respondents indicating that poor sales is problematic has held steady for two straight months, it has failed to show an improvement in March. The index tracking plans of firms to increase employment declined to zero from 4.0 in the prior month, the poorest showing since October 2008, which was during the global financial turbulence. It may be premature to attach a great deal of importance to these results because the April survey will be a better indicator of underlying business conditions as survey participants in the first month of the quarter are significantly larger than the latter two months of each quarter.
Safe-Haven Trades Are Dominating the Marketplace Once Again
Concern about the U.S. economy after soft payroll numbers, stress of eurozone debt crisis, and doubts of a Chinese soft-landing are factors haunting markets in recent trading days. The U.S Treasury note yield has dropped below 2.0% and the German bund was trading at 1.64%, a historical low, as of this writing (see Chart 3, data points do not include todays quotes). As recently as March 19, the U.S. Treasury note yield hit a high of 2.39%. Data to be published between now and Feds April 24-25 FOMC meeting are unlikely to alter monetary policy. The Fed is on a watch-and-wait mode.