Weekly Market Snapshot: February 19th

February 19, 2020

Chief Economist Scott Brown discusses the latest market data.

Retail sales jumped 5.3% in January (+7.4% y/y), up 5.9% ex-autos (+6.1% y/y). Some of January’s strength reflected a smaller decline in the unadjusted figures (-17.3%, vs. -18.5% in January 2020) following a weak holiday shopping season. However, unadjusted figures were still substantially higher than a year ago, suggesting that improvement was likely fueled by the resumption of extended unemployment benefits. Industrial production rose 0.9% in January (-1.8% y/y). Manufacturing output rose 1.0% (-1.2% y/y). Single-family building permits rose 3.8% in January (+29.9% y/y and up 55% from two years ago)

The Producer Price Index jumped 1.3% in January (1.7% y/y), reflecting supply chain constraints and a rebound in prices that were restrained due to the pandemic. Ex-food and energy, the index for unprocessed intermediate goods rose 8.9% (24.9% y/y). Import prices rose 1.4% in January (0.9% y/y), up 0.8% (2.6% y/y) ex-food and fuels. Ex-fuels, prices of imported raw materials rose 4.3% (13.3% y/y), while the index for consumer goods ex-autos edged down 0.1% (0.1% y/y).

Next week, Fed Chair Powell is expected to cover no new ground in his prepared monetary policy testimony to Congress on Tuesday and Wednesday, but investors will tune into the Q&A for any comments about asset valuations and inflation. The second estimate of 4Q20 GDP growth is expected to be close to the advance figure. January personal income and spending data will reflect the increase in pandemic assistance, while the core PCE Price Index should be mild.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 02/19/2021

As of close of business 02/18/2021

S&P Sector Performance (YTD) – 02/19/2021

Economic Calendar

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. 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.

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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 18, 2021.