Hello, I’m Marcie Wright, Managing Director of Private Bank Portfolio Management at Fifth Third Bank, with this week’s Economic Beat.
In a shortened trading week due to the Presidents’ Day holiday, there was a lot of activity for investors to digest. COVID-19 cases have moved dramatically lower over the past six weeks and although vaccine news continued to be positive, severe weather in many parts of the country was disruptive and impacted vaccine distribution. Stimulus talks continued and major U.S. stock indices ended mostly lower last week—except for the Dow Jones Industrial Average, posting a small gain. The 10-year benchmark U.S. Treasury yield moved higher—ending at 1.34 percent, the highest level in nearly a year. After a strong year-to-date advance, West Texas Intermediate Crude Oil moved slightly lower to just over $59 per barrel.
In economic news, the minutes from the Federal Open Market Committee from the January meeting were released. The minutes were dovish—committing to the current policy stance—short-term interest rates will stay in-tact and the Fed will remain accommodative, maintaining the asset purchase program. The minutes stated the economy is “far from” the goal of 2 percent inflation and a recovery in the labor market. Markets reacted to the labor market report last week.
U.S. initial jobless claims moved higher for the second consecutive week, advancing 13,000 in the week ending February 13th to 861,000. While jobless claims were higher than forecast on the week, it’s not unusual to expect some choppiness in the week-to-week numbers.
After a revision to minus one percent in December, U.S. Retail sales posted a strong advance in January of 5.3 percent month-over-month, well above expectations and the largest gain in seven months. Retail gains were broad—stimulus checks and pent-up demand were some of the contributing factors to the healthy retail sales release.
The U.S. Producer Price Index moved up 1.3 percent month-over-month in January. Higher energy prices and COVID-19 related interruptions in the supply chain attributed to the monthly jump in PPI. Excluding volatile food and energy prices, PPI gained 2 percent year-over-year. Both readings came in higher than expected. According to the U.S. Bureau of Labor Statistics, “This advance is the largest since the index began in December 2009.”
In other economic news, U.S. housing starts declined 6 percent month-over-month in January. Building Permits told us a different story—jumping by 10.4 percent to the largest gain since June 2006, emphasizing plans for future home building. Existing Home Sales unexpectedly rose 0.6 percent month-over-month in January, all while the inventory of houses to buy is low and mortgage interest rates remain at attractive, historically low levels. We’ll be watching for the upcoming New and Pending Home Sales release.
In the week ahead, Fed Chair Jerome Powell will be reporting to the Senate Banking Committee and the U.S. Congress House Committee on Financial Services regarding the central bank’s semi-annual monetary policy report and the economy. We’ll be watching for developments on President Joe Biden’s $1.9 trillion stimulus package, as well as a host of economic releases—including personal income and spending data, durable goods orders and the second estimate of the growth of the U.S. economy for the fourth quarter of 2020.
As always, we’ll be watching and reporting back to you next week. Thank you.
