Three Things to Know & Watch – 14 Feb, 2022

By Bill Hornbarger, Chief Investment Officer

Three Things to Watch

  • Multiple Fed speakers are on the docket this week. Chicago Federal Reserve Bank President Charles Evans, New York Federal Reserve Bank President John Williams, St. Louis Federal Reserve Bank President James Bullard and Cleveland Federal Reserve Bank President Loretta Mester all will give speeches. Last week, Bullard said he supports a full percentage increase by July and the possibility of a 50-basis point increase to start this cycle in response to the highest inflation reading in 40 years. The minutes from the January FOMC meeting will be released Wednesday.
  • The economic data calendar features updates on PPI, retail sales, housing starts, and existing home sales. PPI is expected up 11% year-over-year, and retail sales are expected to rebound after a surprisingly soft December reading.
  • Wildcards to watch include the possibility of a Russian invasion of the Ukraine, and how that might affect the bond market where key psychological yield levels were eclipsed last week with the 2-year and 10-year notes trading above 1.50% and 2%, respectively.

Three Things to Know

  • The January CPI report was up 7.5% on a year-over-year basis, the highest in 40 years. Large price increases were measured in energy (+27%) and used cars (+40.5%). Food (+7%), shelter (+4.4%), and medical care services (+2.7%) were all also higher from a year ago. (Source: Haver Analytics)
  • The futures markets are now pricing six interest rate increases in calendar year 2022 and the rate at the end of the year at 1.5% vs. 0% currently. (Source: Bloomberg)
  • The price of a Super Bowl ad is up 18% this year. That’s the largest year-over-year increase since 2001. Since the first Super Bowl, ad prices are up triple the rate of the S&P 500. (Source: Bespoke Investment Group)

 

The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.