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Chief Economist Scott Brown discusses the latest market data.

Tensions in Ukraine dominated. Share prices fell and bonds rallied.

The Federal Open Market Committee (FOMC) minutes from the January 25 to 26 policy meeting suggested no haste in raising short-term interest rates, lowering the market odds of a 50-basis-point hike at the mid-March meeting. Fed officials generally expect inflation to moderate, but most felt that if inflation did not decline as expected, “it would be appropriate for the FOMC to remove policy accommodation at a faster pace than they currently anticipate.”

The Producer Price Index rose 1.0% in January (+9.7% y/y). Retail sales jumped 3.8% in January, following a 2.5% decline in December, likely reflecting a changing seasonal pattern through the pandemic (unadjusted sales fell 18.5%, following a 9.1% gain in December). Industrial production rose 1.4% in January (+4.1% y/y), reflecting a record 9.9% increase in the output of utilities (cold weather). Manufacturing output rose 0.2% (+2.7% y/y), with motor vehicle production down 0.9% (-6.2% y/y). Single-family building permits rose 6.8% in January (-5.0% y/y). The Index of Leading Economic Indicators fell 0.3% in January (following +0.7% in December and +0.8% in November), with six of 10 components making negative contributions (the largest from the increase in jobless claims and the drop in consumer expectations).

Next week: The focus is expected to remain on Ukraine. The data should not have an impact on the economic outlook or on expectations for monetary policy. However, two Federal Reserve governors will be speaking on the current state of the economy.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Bond Rates

Treasury Yield Curve – 2/18/2022

As of close of business 2/17/2022

S&P Sector Performance (YTD) – 2/18/2022

Economic Calendar

Fed Governor Waller Speaks

All expressions of opinion reflect the judgment of the author and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business February 17, 2022.