Over a holiday shortened week, Equities capped a third consecutive week lower, with the S&P 500 falling 2.7%, as the Dow Jones Industrial Average sliding 3.0%, and the Nasdaq Composite losing 3.3%. Markets reacted last Friday to the Federal Reserve’s (Fed) preferred inflation gauge coming in hotter-thanexpected. The personal consumption expenditures (PCE) price index jumped 0.6% in January, its biggest rise since August 2022. Headline inflation increased 5.4% year-over-year (YoY) compared to 5.3% in December. The core rate, excluding food and energy, was up 4.7% from a year ago—a pickup in pace from the prior month. Personal income increased less than expected while spending jumped. In the wake of last Friday’s data, futures markets according to CME Group data, began pricing in a roughly 30% chance of a half-point hike in the federal funds target rate at the next policy meeting in March. A sell-off in Treasurys brought the yield on the 10-year U.S. Treasury note near 4.0%. A few retailer’s Q4 earnings reports indicated some tightening in household budgets, while also giving more cautious outlooks. All in, and down from a previous estimate of 2.9%, U.S. gross domestic product (GDP) over Q4 was revised lower to 2.7%, slower than the initial estimate of 2.9%, and slower than 3.2% growth over Q3 |