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Clarksville, TN – Poor weather continued to have an impact on the economic data. Residential construction and existing home sales fell more than anticipated in January. However, financial market participants seemed to be more willing to dismiss bad economic numbers (as being due to the weather) – U.S. markets also ignored turmoil in the Ukraine.
The CPI rose modestly in January, continuing a low trend. The new and improved Producer Price Report suggested relatively modest pipeline inflation pressures.The January 28th-29th FOMC minutes showed “a clear presumption” of a steady pace of tapering of Fed asset purchases (-$10 billion per month at each FOMC meeting), but officials noted that the pace could be altered if there were a “substantial” deviation from the economy’s expected path.
Officials agreed that the Fed’s forward guidance (on short-term interest rates) would have to be changed as the unemployment rate neared 6.5%, but there was no agreement about the form that such forward guidance would take. “A few” Fed officials thought it might be appropriate to raise the federal funds target rate “relatively soon.”
However, this was clearly a minority view, met with strong opposition from other Fed officials.
Next week, the economic data reports will remain subject to weather distortions. Fed Chair Janet Yellen will repeat her monetary policy testimony to the Senate Banking Committee. Given the passage of time (this hearing was postponed two weeks due to the weather), something new may come up in the Q&A, but the Senate generally gives the Fed chair an easier time than the House. The estimate of 4Q13 GDP growth is expected to be revised lower (to about 2.6%, from 3.2% in the advance estimate).
Consumer Money Rates
Treasury Yield Curve – 02/21/2014
S&P Sector Performance (YTD) – 02/21/2014
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Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business February 13th, 2013.
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