Hello, this is Claire Ellerhorst, Senior Portfolio Manager at Fifth Third Bank with this week’s Economic Beat.
Major U.S. equity indices were flat to modestly lower last week, with the S&P 500 Index down less than one tenth of one percent, lower for a second straight week following a four-month rally in stocks. The Dow Jones Industrial Average was flat for the week and the tech-heavy Nasdaq Composite Index was down 0.7% in total return. U.S. government bond yields rose, with the 10-year Treasury yield ending the week at 4.31%, up from 4.07% the prior week. Crude oil prices were higher amid tightening supply, rising to the highest levels in more than four months. Bitcoin retreated late in the week after hitting record highs but remains up more than 60% year-to-date.
Economic data included inflation readings that came in slightly ahead of expectations. The so-called core Consumer Price Index (CPI) that excludes volatile food and energy prices rose 3.8% year-over-year in February. This reading was down from a 3.9% pace in January but higher than expectations for a 3.7% increase. Headline CPI was also ahead of forecasts at 3.1% year-over-year. Similarly, the Producer Price Index (PPI) showed price gains that were slightly higher than most economists had expected. Retail sales rose less than anticipated in February, but still reflected a rebound from January’s decline.
In the week ahead, the U.S. Federal Reserve is expected to hold interest rates steady at its March Federal Open Market Committee meeting. Focus will be on the so-called dot plot of Fed officials’ expectations for the path of rates ahead. The most recent dot plot reflected expectations for three rate cuts in 2024, an expectation the market has largely come around to in recent months. Ahead of the meeting, Fed funds futures suggest investors expect the Fed to begin cutting rates in June or July. The Bank of Japan also meets to set monetary policy this week. On the U.S. economic calendar, housing data will be in focus with releases on housing starts and existing home sales.
As always, we’ll be watching and reporting back to you. Thank you.
