Contact Us
Download PDF

Week In Review

Yellen Testimony

Fed Chair Janet Yellen presented the Semiannual Monetary Policy Report to Congress this week. In prepared remarks, Yellen testified that “the economy has continued to make progress toward our dual-mandate objectives of maximum employment and price stability.” In addition, she indicated that “gradual increases in the federal funds rate will likely be appropriate” though “the economic outlook is uncertain, and monetary policy is not on a preset course.”

Our Take

Yellen’s testimony is more of the same from the Fed. The FOMC believes it will raise rates this year but continues to be data dependent. Market participants took Yellen’s testimony to be rather hawkish, but actually increasing rates has been more difficult for the Fed than talking about increasing rates. Changes to monetary policy in 2017 remain anyone’s guess.


Both producer and consumer prices rose 0.6% in January. Year-over-year, consumer prices increased 2.5%, while producer prices rose 1.6%.

Our Take

Rising energy prices were the primary driver of increasing inflation in both January and the previous year. Inflation expectations have risen recently. Future reports will be closely watched, as inflation appears to be trending near the Fed’s two percent target, and any further increases could lead to rate hikes.

Retail Sales

Retail sales rose 0.4% in January, higher than expectations. December sales were revised higher, from 0.2% to 0.4%.

Our Take

An energy effect appeared in the retail sales numbers, as gas station sales were the largest contributor to the strong report. Consumers appear confident, as sales have increased for five months in a row.


Moody’s Investors Service released a report this week that detailed municipal bond upgrades and downgrades in 2016. The report showed that the ratings agency issued more upgrades than downgrades during the last calendar year. Moody’s had 563 upgrades on $126 billion of debt compared to 489 downgrades on $100 billion of debt in 2016.

Our Take

Upgrades outpacing downgrades is good news for municipal bondholders. Many municipalities have experienced rebounding economies and increasing tax collections, which improve their overall fiscal health.