Clarksville, TN – Greece’s reform proposals were accepted by European finance ministers, effectively kicking the can down the road for another four months.
In her monetary policy testimony, Fed Chair Janet Yellen signaled that the Fed will begin to consider raising short-term interest rates on a meeting-by-meeting basis. Before then, the Fed will change its forward guidance (currently, the language suggests that the Fed can be “patient” in deciding when to raise rates).However, Yellen emphasized that a change in forward guidance would not necessarily mean that the Fed would hike rates “in a couple of meetings.”
Yellen indicated that for the Fed to raise rates: 1) it must see further improvement in the job market; 2) it must expect further improvement in the job market beyond that; and 3) it must be “reasonably confident” that inflation will move toward the 2% goal.
The Consumer Price Index fell 0.7% in January, down 0.1% from a year earlier (the first year-over–year decline since October 2009). Ex–food & energy, the CPI rose 0.2% (+1.6% y/y). The estimate of 4Q14 GDP growth was revised to a 2.2% annual rate (vs. +2.6% in the advance estimate). Most of the revision was due to slower inventory growth.
Private Domestic Final Sales (GDP less net exports, the change in inventories, and government) rose at a 3.5% annual rate (vs. +3.3% in 3Q14). Consumer spending rose at a 4.2% pace (vs. 4.3% in the advance estimate), while business fixed investment rose to +4.8% (from +1.9%). The week’s other data were mixed, but consistent with moderate growth in the near term.
Next week, the economic calendar remains packed, with plenty of potentially market-moving data releases. The focus is expected to be on Friday’s employment report, which should reflect an impact from adverse weather.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.552||1.669|
|Dollars per Euro||1.136||1.374|
|Japanese Yen per Dollar||118.740||102.380|
|Canadian Dollars per Dollar||1.242||1.108|
|Mexican Peso per Dollar||14.863||13.234|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||3.25||2.80|
Treasury Yield Curve – 02/27/2015
S&P Sector Performance (YTD) – 02/27/2015
|March 2nd||—||Personal Income and Spending (January)
ISM Manufacturing Index (February)
|March 3rd||—||Unit Auto Sales (February)|
|March 4th||—||ADP Payroll Estimate (February)
ISM Non-Manufacturing Index (February)
Fed Beige Book
|March 5th||—||ECB Policy Meeting|
|March 6th||—||Employment Report (February)
Trade Balance (January)
|March 12th||—||Retail Sales (February)|
|March 18th||—||FOMC Policy Decision, Yellen Press Conference|
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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 26th, 2015.