Weekly Market Commentary February 10th to February 14th 2025

Last week the markets reacted to hotter-than-expected inflation data and weaker-than-expected retail sales.

For consumer prices, the Consumer Price Index (CPI) increased 0.5% over the prior month and 3.0% over the last year. For producers, the Producer Price Index (PPI) increased 0.4% and 3.5%, respectively. Both indexes were above expectations and higher than the prior readings, mainly due to higher food and energy prices. Core CPI, which strips out food and energy costs, increased 0.4% and 3.3% on the month and year, while PPI increased 0.3% and 3.6% for the same periods, largely due to rising shelter costs. Although there are seasonal impacts such as insurance renewals that played a role in the hot print, it stands to reason that the Fed will likely see this data and elect to hold rates steady for longer.

U.S. Retail Sales declined 0.9% in January, the largest drop in nearly two years. The sudden decline in spending can be partly attributed to the devastating wildfires in Los Angeles, as well as severe winter weather in other parts of the country, which could have depressed brick-and-mortar shopping activity. However, the consumer continues to deal with stubborn inflation and high borrowing costs, which remains a factor for the lack of spending.

The equity markets closed in the green for the week. The S&P 500 closed 1.5% higher to 6,115, the Nasdaq 2.6% higher to 20,027, and the Dow Jones 0.5% higher to 44,546. U.S. Treasury yields finished the week mostly flat with the 2-Year Treasury closing at 4.26% and the 10-Year at 4.48%.

This week we will get housing data in the form of Housing Starts, Building Permits, and Existing Home Sales, as well as manufacturing and services data.