Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The economic data were mixed. Retail sales and industrial production figures for January disappointed, but softness was seen as likely to have been the result of poor weather. The Fed’s two main regional manufacturing surveys were strong in February, with a further intensification of input price pressures and evidence that firms are a bit more able to pass along higher costs. January inflation figures were mostly higher than expected. The core CPI rose 0.2%, reflecting some one-time increases (such as apparel). Minutes of the January 25-26 Fed policy meeting showed that officials were somewhat more optimistic about 2011 GDP growth, but did not expect much improvement in the unemployment rate over the course of the year.
The stock market seemed to struggle a bit with the economic data, although reactions were limited. The major market averages still managed to forge ahead during the week.
Next week, the economic data will be subject to more than the usual uncertainties. Home sales are normally low in January – seasonal adjustment may magnify any adverse effects from poor weather. The Conference Board changed the company that does the actual sampling for the Consumer Confidence Index, so new figures may not be exactly comparable to the old (although they’re supposed to be). Durable goods orders are notoriously choppy – expect a rebound in aircraft orders and some weather effects in January. The government’s estimate of fourth quarter GDP growth is likely to be revised higher. Looking ahead, the February Employment Report looms large, but there will likely be some lingering weather effects in the jobs data.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.616||1.570|
|Dollars per Euro||1.359||1.362|
|Japanese Yen per Dollar||83.290||90.800|
|Canadian Dollars per Dollar||0.985||1.046|
|Mexican Peso per Dollar||12.038||12.877|
|10-year municipal (TEY)||5.57||5.54|
Treasury Yield Curve – 2/18/2011
S&P Sector Performance (YTD) – 2/18/2011
|February 21st||—||Presidents’ Day (markets closed)|
|February 22nd||—||S&P/Case-Shiller Home Prices (December)
Consumer Confidence (February)
|February 23rd||—||Existing Home Sales (January)|
|February 24th||—||Jobless Claims (week ending February 19th)
Durable Goods Orders (January)
New Home Sales (January)
|February 25th||—||Real GDP (Q410, 2nd estimate)
Consumer Sentiment (February)
|February 28th||—||Personal Income and Spending (January)|
|March 1st||—||ISM Manufacturing Index|
|March 2nd||—||Bernanke Monetary Policy Testimony (tentative)|
|March 3rd||—||ISM Non-Manufacturing Index (February)|
|March 4th||—||Employment Report (February)|
|March 15th||—||FOMC Meeting|
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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 10th, 2011.