“Watch Your Step”

• Monetary policy took center stage last week, as the Federal Reserve (Fed) took another step toward normalizing monetary policy by raising the discount rate.

• Aside from another disappointing reading on jobless claims, the week’s economic data on the housing and manufacturing sectors came in better than expected. In addition, the market digested Fed deliberations on the economy, inflation, and monetary policy “exit” strategies.

• This week’s U.S. economic data focuses on the manufacturing sector, housing, and the consumer. Both fiscal and monetary policy will be on the front burner this week, with key testimonies from both Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Tim Geithner.

Key Reports This Week:

This week’s U.S. economic data focuses on the manufacturing sector (January durable goods orders and the February reading on the Chicago area purchasing managers index), housing, (new and existing home sales for January), and the consumer (consumer confidence and consumer sentiment for February). The market will also be keenly interested in Federal Reserve Chairman Bernanke’s Monetary Policy testimony to Congress. In addition to Bernanke, several other Fed officials, as well as Treasury Secretary Tim Geithner have public appearances scheduled. Thus, the Fed’s exit strategy, along with all matters fiscal (debt ceiling, budget deficits, the TARP, etc) are likely to be in the news.

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Tagged as: Ben Bernanke, Consumer Confidence, CPI, Durable Goods, Existing Home Sales, Federal Reserve, Financial News, John Canally, LPL Financial Research, Monitary Policy, TARP, Weekly Economic Commentary