On Friday, Greece reached an agreement with eurozone finance ministers to extend its economic bailout through June. The four extra months of financial aid depend on reforms that the country will present to its creditors this week (they must be approved by April). Stateside, minutes from the Federal Reserve’s January policy meeting noted that most Fed officials favored “keeping the federal funds rate at its effective lower bound for a longer time,” which also pleased the markets.1,2
PRODUCER PRICES FALL BY MOST IN 5 YEARS
Labor Department data showed an 0.8% dip in the Producer Price Index in January, the largest monthly decline since November 2009. Cheaper fuel costs were the major factor. The core PPI (minus food and energy prices) was flat year-over-year.2
LESS GROUNDBREAKING IN JANUARY
The pace of housing starts slowed 2.0% last month – not surprising given the rough weather in much of the nation. January also saw building permits decline 0.7%. While the Commerce Department reported fewer single-family projects starting up, multi-family construction actually accelerated in the year’s opening month.2
STOCKS MOVE NORTH
Solid gains occurred during a short trading week: DJIA, 0.94% to 18,140.44; NASDAQ, 2.02% to 4,955.97; S&P 500, 0.63% to 2,110.30. WTI crude fell 5.20% for the week, settling Friday at $49.91 a barrel; gold slipped 2.36% for the week to a Friday COMEX settlement of 1,199.10.3
THIS WEEK: The National Association of Realtors reports January existing home sales on Monday. Tuesday, Fed chair Janet Yellen begins two days of testimony to the Senate Banking Committee, and February’s Conference Board consumer confidence index, the December S&P/Case-Shiller home price index, a new reading on euro area inflation and earnings from Home Depot, Hertz Global, Comcast, Macy’s, First Solar, Domino’s, Hewlett-Packard and Office Depot arrive. Wednesday, investors assess the Census Bureau’s report on January new home buying, an HSBC factory PMI for China and earnings from Lowe’s, Campbell Soup, RBC, SodaStream, TJX, Target, Chesapeake Energy, Dollar Tree and Transocean. News items for Thursday include January’s CPI and durable goods orders, new initial claims figures and quarterly results from Sempra Energy, AMC Networks, Anheuser-Busch, Autodesk, Gap, Herbalife, J.C. Penney, Kohl’s, L Brands and Monster. On Friday, the second estimate of Q4 GDP arrives, plus the University of Michigan’s final February consumer sentiment index and NAR’s January pending home sales report.
|% CHANGE||Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||2/20 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.38%||0.63%||1.52%||1.67%|
Sources: online.wsj.com, bigcharts.com, treasury.gov – 2/20/154,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation
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1 – tinyurl.com/kfx2gv2 [2/20/15]
2 – bloomberg.com/news/articles/2015-02-18/factory-production-in-u-s-climbed-less-than-forecast-in-january [2/18/15]
3 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [2/20/15]
4 – markets.wsj.com/us [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F20%2F14&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F19%2F10&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F18%2F05&x=0&y=0 [2/20/15]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/20/15]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/20/15]