Note: Since the publication of this report, the stock market is down significantly, most recently on the Trump announcement of tariffs.

During a light last week of Februrary for economic data, investors were mostly focused on the Fed minutes.There were few surprises in the minutes or in the data, and mortgage rates ended last week with little change.

The Fed Minutes: The minutes from the January 31 Fed meeting contained no significant surprises.They were viewed as a little more dovish than expected, meaning in favor of a slower pace of rate hikes. However, this was offset by some key events which have taken place over the three weeks since the meeting took place.

Wages: Notably, the wage component of the key monthly Employment report and the core inflation reading in the CPI data both were stronger than expected.Also, Congress passed a government spending bill which was larger than expected, which could put upward pressure on future inflation.Investors are concerned that Fed officials have become more hawkish since the January meeting.

Housing: The most significant economic data released last week was for the housing sector and it fell short of the expected levels.In January, sales of previously owned homes decreased 3% from December.Sales were 5% lower than a year ago, which was the largest annual rate of decline since 2014.A lack of inventory in many regions again was the primary cause of the weakness. In fact, the inventory of previously owned homes for sale was 10% lower than a year ago.It was at just a 3.4-month supply, white a 6.0-month supply is considered a healthy balance between buyers and sellers.

Major Economic News – Looking ahead, investors will be most focused on Jerome Powell’s first speech as Fed chair on Wednesday.Beyond that, Durable Orders will be released tomorrow.The second estimate of fourth-quarter GDP, the broadcast measure of economic growth, will come out on Wednesday. The Core PCE price index, the inflation indicator favored by the Fed, will be released on Thursday.The ISM national manufacturing index will come out on Friday.

Written by Mark Cohen of Cohen Financial Group markcohen@cohenfinancialgroup.com

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