This week's economic focus shifted from domestic indicators to the changing political landscape in Washington and the potential impact of new policies on the economy. Internationally, tariff discussions dominated the headlines.
This week saw a relatively light domestic economic indicator schedule and a media blackout period ahead of next week's FOMC meeting. Consequently, the focus shifted to the changing of the guard in Washington and the anticipated policy details from the new administration, which will significantly influence economic performance in the coming years. Internationally, the economic data flow was relatively subdued.
The majority of market participants' attention was drawn to President Trump's first few days in office, particularly regarding ongoing tariff discussions. While foreign central banks remained relatively inactive this week, the Turkish central bank and the Bank of Japan convened to evaluate monetary policy.Looking ahead, the upcoming week features several key economic events. The FOMC will release its statement on Wednesday, followed by the release of GDP data on Thursday and Personal Income and Spending figures on Friday. On the international front, China's PMIs will be released on Monday, the Bank of Canada will announce its policy rate decision on Wednesday, and the European Central Bank will announce its policy rate on Thursday. The focus on interest rate movements remains strong. While no change in the fed funds rate is anticipated at next week's Fed meeting, the potential impact of rising longer-dated Treasury yields is a key consideration. These rising yields could exert a restrictive influence on the economy, counteracting the Fed's accommodative policies at the short end of the yield curve. In the credit market, credit spreads continued their downward trend last year, reflecting an overall increase in optimism regarding the economy among market participants. Despite this improvement, investors maintain a degree of caution. This week's spotlight shines on the impact of the devastating wildfires in Los Angeles on shelter inflation. The fires have triggered a surge in demand for rental properties as displaced residents seek new housing. This shock to the regional housing market will undoubtedly affect costs in Los Angeles, but the question remains: will the inflationary impact extend beyond the local market and ripple through the national economy?
FED INTEREST RATES TARIFFS ECONOMY INFLATION
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