Monday, March 20, 2006

Blog of the Week: In The Money

Weekly Recap

Here is a recap of this week's market activity:

The S&P 500 index was up every day this week. This was not due to specific news, but rather to a growing belief that the Federal Reserve may be nearing the end of its current rate hike phase.

That line has been heard before. That doesn't matter, and neither does the fact that there was little from the Federal Reserve to change market perceptions. There was a bit of data that helped, but not much.

The February core CPI was up 0.1%. That was a bit below an expected gain, but the underlying trend in inflation hasn't changed much. On a year-over-year basis, the core CPI is up 2.1%. The annualized rate of increase the past three months is 2.0%. The past two months it is also 2.0%. That isn't a lot for the Fed to hang its hat on in terms of claiming victory. The inflation news clearly isn't bad, but it also isn't a change in trend.

Economic expectations haven't changed either...

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