Is Russia planning to continue growing its empire with further land grabs? Did Federal Reserve Chairwoman Janet Yellen intentionally spook the market by suggesting higher interest rates are coming sooner than expected? And, are we seeing an end to housing-driven economic growth? These are the primary questions swirling around financial markets this week.
Let’s dive in and find some takeaways.
It was just a few days ago, but the financial intelligentsia is already using the word “infamous” to describe Yellen’s comments this week suggesting there will be six months between the end of stimulative purchases and the start of rate hikes — sooner than some expected. The stock market reacted by shedding a couple hundred points, but has recovered to the 16-and-change mark we’ve been at for much of the year. Most predict the Fed’s Quantitative Easing will end in the fall, meaning we interest rates may begin to rise in mid 2015.
Other nuggets from the Federal Open Market Committee statement: economic activity slowed during winter months, household spending and business investments continued advancing, housing recovery has slowed and that maintaining inflation below 2 percent could pose risks to future economic performance.
Speaking of housing, we also have the latest report from the National Association of Realtors total existing-home sales declining 0.4 percent in February to a seasonally adjusted annual rate of 4.6 million — down from 4.62 in January. Housing inventory rose 6.4 percent to an estimated total of 2 million existing homes for sale, which represents a 5.2-month supply at the current pace.
Zooming out, the market bottomed out in mid 2010 and recovered steadily until last summer when existing-home sales started falling. It’s safe to assume home sales may look rosier now that spring has officially sprung.
It’s not Friday without a little unemployment talk… The latest numbers from the Department of Labor show a miniscule increase in weekly claims up to 320,000, up from 315,000 the previous week. Our 4-week moving average fell by 3,500 to 330,500. This previous week’s numbers were not revised.
Oil prices continue to rise; global turmoil remains a significant possible headwind in the months ahead; indications continue suggesting the winter weather was a real drag on the economy. Now that it’s officially springtime, expect to see more optimistic numbers, provided Russia doesn’t begin eyeing up the Bering Strait.