Looking back, it is understandable why the Australian and New Zealand currencies peaked in early 2005. That was about the same time that the demand for crude oil also started to moderate.
The Philadelphia Fed business outlook index is still above zero in January, pointing to expansion, but the expansion is not quite as broad.
The PPI numbers generally have been running higher than the CPI numbers, showing that the higher production costs are not being passed on.
The big number is the employment number on Friday. If that number comes in weak for the third consecutive month, views on the Fed are likely to change significantly.
The bond market liked the inflation data. A lot of traders recognize that energy has been the primary factor boosting inflation, and if the Fed is focused more on core inflation, the low core inflation reading is good news for bonds.
The bond market had been thinking that the weak economic numbers that we've seen would cause the Fed to think twice about raising rates,
Generally I think these numbers could reduce some of the concerns about a quick or dramatic change in Fed policy.
We think the economy is poised to slow down and that's good news for the Federal Reserve.
The longer Congress delays helping the economy out, the longer the economy will remain weak.
The lower-than-expected number of new jobless claims shows that the labor market is continuing to improve. It suggests that the economy is strong and that companies are feeling more comfortable about hanging on to workers.
