The U.S. stock market ended the week lower as coronavirus concerns are reinstalled and the Markit Services Purchasing Manager Index (PMI) fell into contraction (i.e. below 50) for the first time in four years. Consequently, interest rates fell considerably as the 10-year treasury yield dropped from 1.59% last week to 1.47% today, and the price of gold jumped 3.7% to $1,646 an ounce. Meanwhile, the price of crude oil rose 2.1% to $53.35 a barrel primarily due to the U.S. placing sanctions on Russian-oil giant Rosneft.

(Click on image to enlarge)

This Week's Economic Highlights

• The Producer Price Index (PPI), a measure of wholesale inflation, jumped by 0.5% in January, its sharpest monthly incline in 15 months.Core PPI, which excludes the volatile food and energy prices rose slightly less yet still strong 0.4%.Over the past year, PPI has risen a stable 2.1% when just a month ago it had only risen at a rate of 1.3%.Meanwhile, core PPI only rose 1.5% over the past year.

• Housing starts (i.e. construction of new homes) fell 3.6% in January while housing permits, a forward-looking indication of housing starts, spiked 9.2%. Over the past year, both housing starts and permits are substantially higher, reflecting a booming housing market from falling mortgage rates.

• The minutes from the Federal Reserve’s meeting at the end of January indicated that officials felt the U.S. economy seems stronger than they had expected. However, there were concerns expressed by some officials about the threat of the coronavirus and tension with the Middle East. Officials also expressed “cautious optimism” when discussing the business sector.

• Initial unemployment claims rose by a slight 4,000 to 210,000 for the week ending February 15th, while its more stable four-week average fell by 3,250 to 209,000. Continuing unemployment claims, which lags initial claims by a week, rose by 25,000 to 1.73 million. Both initial and continuing unemployment claims remain near all-time lows.

• Existing homes sales (i.e. sales of previously-owned homes)slipped by 1.3% in January to an annual pace of 5.5 million. The median sales price of existing homes has risen 6.8% to $266,300 over the past year, which has not impacted sales which have risen a strong 10% as falling mortgage rates bridge the affordability gap.