This week markets will be focused the Personal Consumption Expenditures Price Index

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Published Date 2/24/2025

After strong improvements last Friday, this morning a little pull back, the 10 year note at 9 am ET 4.45% +2 bps and MBS prices down 7 bps. Today the only scheduled event, $69B 2 year note auction at 1 pm.

The focus this week will be on Friday’s January PCE, the Fed’s go to for inflation, both month/month overall and core expected to have edged higher but the year/year overall and core expected to have declined. The Chicago Fed released its national activity index this morning. The index declined 0.03 from an upwardly revised 0.18 in December 2024, suggesting economic growth decreased. The personal consumption and housing category's contribution was -0.14 in January, down from +0.02 in December. Also, production-related indicators contributed +0.03, down from +0.19. The sales, orders, and inventories category made a neutral contribution, up from -0.04; and employment-related indicators contributed +0.07, up from +0.01. Meanwhile, the index's three-month moving average, increased to +0.03 in January from -0.13 in December 2024.

Last Friday the main stock indexes were hit hard, driven by continued weakness of consumer sentiment. Consumer sentiment for the US was revised sharply lower to 64.7 in February 2025 from a preliminary of 67.8, reaching the lowest level since November 2023. The gauge for current economic conditions was also revised lower to 65.7 from 68.7 and the expectations subindex was revised down to 64 from 67.3.

At 9:30 am the DJIA opened +152 after being up 300 points overnight and -749 last Friday, NASDAQ opened +71 from -438 Friday and S&P started +22 from -104. The 10 year note at 9:30 am 4.44% +1 bp FNMA 6.0 30 year coupon at 9:30 am -5 bps from Friday’s close and unchanged from 10 am Friday.

Over the weekend Berkshire Hathaway, Warren Buffett , released his annual letter to investors. Now half of Berkshire’s assets are in cash and T-Bills. He warned about the risks to America from “fiscal folly” and from “scoundrels and promoters” who “take advantage of those who mistakenly trust them.” “The American process has not always been pretty,” he wrote.

This week’s keys come on Thursday and Friday, PCE being the centerpiece on Friday.

This Week’s Economic Calendar:

Monday,

1 pm $69B 2 year note auction

Tuesday,

9 am December Case/Shiller home price index (20 city year/year 4.4% from 4.3%)

10 am February consumer confidence index (103.0 from 104.1)

1 pm $70B 5 year note auction

Wednesday,

7 am weekly MBA mortgage applications

10 am January new home sales (680K from 698K)

1 pm $44B 7 year note auction

Thursday,

8:30 am weekly jobless claims (224K)

2nd look at Q4 GDP (+2.3%, personal consumption spending +4.2%)

January durable goods orders (+1.9% from -2.2%, ex transportation +0.4% from +0.3%, core capital goods +0.5% unch from December)

10 am January pending home sales (-1.2% from -5.5% in December)

Friday,

8:30 am January PCE (month/month +0.4% from +0.3%, year/year +2.5% from 2.6%; core PCE month/month +0.3% from +0.2%, year/year +2.6% from +2.8%)

January personal income (month/month +0.3% from +0.4%, personal spending +0.2% from +0.7%)

9:45 am February Chicago purchasing managers index (41.0 from 39.5)

Source: TBWS

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