Top Stories Last Week
• Stocks Have Their best Week So far this year
The stock market got a boost on Tuesday when Janet Yellen, the new head of the Federal Reserve, said she would continue the central bank’s low-interest rate policies. The US stocks finished the best week in 2014 as Congress moved toward raising the U.S. borrowing limit without the political drama of last year. Last week, S&P index rose 2.4%, and MSCI EAFE index rallied 2.1%. The MSCI Emerging Market was up 2.1%. Gold climbed 4.1%, and the SPGC commodity index rallied by 0.9%. The bond markets dropped slightly. Barclays US Treasury index declined 0.2%, while US high yield bonds rose by 0.5%.
• Janet Yellen Testimony in Congress
In her first testimony before Congress as Federal Reserve Chair Janet Yellen pledged to continue on the path set by her predecessor Ben Bernanke. “His leadership helped make our economy and financial system stronger and ensured that the Federal Reserve is transparent and accountable,” said Yellen in a remarks delivered before the House Committee of Financial Services. Speaking about the economic recovery, monetary policy and the financial systems Yellen expressed optimism about developments in recent months, but also made it clear work must be done to meet the Federal Open Market Committee’s objectives for the economy.
• US Retail Sales Dropped 0.4% in the Cold Weather
Cold weather across much of the nation contributed to a drop in retail sales in January. Americans spent less on autos and clothes and at restaurants. The Commerce Department said that retail sales fell a seasonally adjusted 0.4% last month. That marked the second straight decline after a 0.1% drop in December. Freezing cold and heavy snowfall raked much of the United States, cutting into store traffic and weighing on post-holiday sales. Prospects for economic growth could remain lackluster for February, too, after snowstorms blanketed almost a third of the nation Thursday. The storm overlaps this week with a government survey that’s being used to calculate the February jobs report.
• Euro Zone GDP Growth Improved to 0.3% in Q4 2013
The eurozone’s economy grew by 0.3% in the final three months of 2013, up from 0.1% growth in the previous quarter. It was the third quarter of growth since the end of an 18-month recession, the longest period of contraction to affect the single currency area. The figures from Eurostat, the EU’s statistics office, also showed that during 2013, GDP contracted by 0.4% in the Eurozone.
Top Stories to Watch This Week
• US Housing Markets
US housing starts are likely to grow at 0.975MM pace in January, continuing a robust trend of housing recovery.
• Bank of Japan Monetary Policy Meeting
Bank of Japan will meet on Tuesday. Interest rates and bond purchase program will be likely to remain intact.
• US Inflation
The headline CPI is expected to rise by 1.6% YOY in January. The Fed can still keep a loose monetary policy in place without triggering inflation concerns.
• German Economic Sentiment
ZEW Economic Sentiment, the leading indicator in Germany is likely to continue showing improvement at 61.7.