WEEKLY UPDATE FOR JUNE 20TH
This week’s big event was the Fed Meeting but inflation news built excitement around the meeting.
The Consumer Price Index (CPI) came in at 2.1% – this is within the Fed’s target of 2-2.5%. Interesting note, the CPI’s cumulative change since 2000 has been over 40% (see chart below). That’s pretty significant.
The Fed’s favorite gauge for inflation, the PCE (Private Consumer Expenditures), came in 2.6% YOY. What’s interesting is that the PCE doesn’t account for housing expenses – which is bizarre and makes this number artificially lower. By contrast 24% of the CPI is housing related.
So knowing this information about inflation made the Fed’s comments a bit of a surprise. Fed Chair(wo)man, Janet Yellen, dismissed the recent inflation reports and called them “noise.” The initial response was positive and the markets responded with lower rates; however, on Thursday and Friday the markets gave back the gains and the rates ended relatively flat for the week.
Check out the chart below indicating the Fed’s sentiments for future rates. Each dot represents a Fed member and their opinoin on where the Fed Funds Rate will be in the future. (It’s currently at .25%). Notice how all but one member agree that rates will remain unchanged for 2014 AND based of Jan Yellen’s prevoius announcement regarding the tapering of QE, the projected rate hikes for 2015 will most likely come at the year end. Fed statement indicated that they don’t think inflation will get to 2% until the end of 2016…. 2.5 years away.
Sales Tip for the week: get out and get social. I did two happy hour events this week and they were great opportunities to reach out to the database to invite them and create an opportunity for a referral. Let us know if we can help you do any type of event as we’re happy to do what we can.
Check out our flyer for today’s rate: Rates for 6.20