Making Sense: In Brief
The week ahead for markets and the economy
Monday, February 24, 2025
Blake: Last week, the Federal Reserve released its minutes from its January meeting, signaling its plan to keep interest rates on hold, at least until inflation falls further.
This week, markets will be focused on Friday's personal income and spending report and the accompanying PCE inflation print. A couple weeks ago, the CPI inflation report surprised markets and forecasters with a much-hotter-than-expected number. But the bond market reaction was ultimately fairly muted, and that's probably because markets expect Friday's PCE report, which is the inflation figure the Fed says it targets, is expected to come in at a softer pace but still closer to 3% than 2%.
On Tuesday, we'll see the latest house price data for December. Mortgage rates are elevated, but limited supply on the market seems to be placing a support underneath prices. In the last months of 2024, average yearly house price growth was running at a 3% to 4% pace, down slightly from the 5% to 6% pace in prior quarters.
Lastly, throughout the week, investors will be observing a long series of Federal Reserve policymakers' speeches. Markets are well-aware the Fed is on hold for now. There's been little change recently in the expectation for just one or two rate cuts this year. Instead, where markets will be focusing attention is on to what extent policymakers may or may not be changing their tune on the risks to the inflation outlook, especially given this month's hot CPI report and increased policy uncertainty out of Washington around new increased tariffs on imports.
So things to watch this week. One, Friday's personal income and PCE inflation report. Two, house price data coming out on Tuesday. And three, Federal Reserve policymakers' speeches throughout the week.
Authors
Brent Ciliano CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Brent.Ciliano@FirstCitizens.com | 919-716-2650
Phillip Neuhart | SVP, Director of Market & Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Phillip.Neuhart@FirstCitizens.com | 919-716-2403
Blake Taylor | VP, Market & Economic Research Analyst
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Blake.Taylor@FirstCitizens.com | 919-716-7964
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