Weekly Market Commentary 02/24/2017

The odds that the Federal Reserve will hike interest rates before mid-year has been increasing for several weeks, thanks to stronger-than expected economic data as well as the pick-up in some key inflation measures. Heading into February, the consensus forecast was that the next rate increase would not be implemented until June, giving the Fed time to assess economic conditions over the first half of the year and perhaps get a clearer picture of the timing and substance of the fiscal policy initiatives coming out of Capitol Hill. The latter part remains as murky as ever and we would be surprised if any tax or spending measures are finalized before the second half of the year, if then. But the Fed appears to have been surprised by the economy’s momentum, and seems receptive to speed things up.