It is a relatively quiet session thus far as we play the waiting game. Fed Chair, Janet Yellen, is expected to speak Tuesday, and there will be more comments from the Fed later this week. This morning, John Williams, San Francisco Fed President, stated that he felt that despite global developments keeping the U.S. from going back to normalized interest rate, our economy is doing “quite well.” So the tug of war within the fed continues on how many rates hikes there are in store for the year.
To make their decisions more difficult, the consumer remains worrisome as spending was up a mere 0.1% in February and January was revised lower from 0.5% to 0.1%. Core personal consumption expenditures (PCE), the Fed’s preference for measuring inflation, which excludes food and energy, increased 0.1% from January, and up 1.7% for the past year through February, but still below the Fed’s 2% target. In addition, personal income increased a modest 0.2%.
The consumer did seem to be in the mood to buy previously owned homes as contracts in February rose to a 7 month high and reversed January’s revised 3% decline. The Pending Home Sales Index (PHS), an indicator of housing activity measured by contract activity and signed contracts for existing single family homes including condominiums and co-ops, increased 3.5% to 109.1 in February. The PHS typically leads existing homes by one or two months allowing for the time from contract to sale.
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