Weekly Market Update: April 18, 2017
What We Learned Last Week
- Consumer prices fell by an unusually large amount in March, pulling the year-over-year rise in both the overall Consumer Price Index (CPI) and core CPI measures back to the 2 percent area. March price weakness was centered in hotel accommodations, apparel, motor vehicles, education and personal care categories and likely was an aberration.
- Incoming reports continue to point to slow real Gross Domestic Product (GDP) growth in the first quarter, counter to the robust trends in the job market. Forecasters believe that a seasonal distortion accounts for the weak 1Q GDP outcome and that this will reverse with a bounce-back in the second quarter.
- Futures markets are translating Fed talk about balance sheet adjustments to mean a slower pace of increases in the federal funds rate target, at least for now. Counterintuitively, that view hasn’t translated into higher bond yields.
What We Expect to See in the Week Ahead
- The week’s calendar features reports on March housing and industrial production as well as surveys of purchasing managers.
View our economic commentary disclaimer.