Weekly Market Commentary 11/16/2018

The latest batch of economic reports provides a good example of why it’s important to look beyond the headline numbers. On the surface it would seem that inflation is heating up and consumer spending is surging, underscoring the urgency of the Fed to accelerate its rate-hiking plans. A deeper dive into the data, however, should temper that perception. To be sure, neither the headline readings nor the underlying details had much of an impact on the financial markets during the week. Nor, for that matter, are they about to alter the Fed’s thinking. Speaking in Dallas on Wednesday, Chairman Powell stuck to his guns, suggesting that the Fed will continue to raise rates gradually. He noted that while the strong economy justifies further rate increases, lest inflation or asset bubbles take hold, the Fed is also mindful of the risk of moving too aggressively, which could prematurely choke off the expansion.