Weekly Market Update

US CONSUMER PRICE INDEX INCREASE BEATS EXPECTATIONS

Thursday, February 15, 2018

The Consumer Price Index (CPI), a key indicator of inflation trends, increased 0.5% in January, well above market expectations. Core inflation, which strips out volatile food and energy prices, rose by 0.3%. Market participants, however, suggested that the overall picture hasn't changed much. The year-over-year increase in the CPI was unchanged at 2.1%. The 12-month rate of core inflation was also flat at 1.8%, slightly below the Fed's 2% annual target. U.S. stocks gained on Wednesday, shrugging off an initial sharp dip following the release of the CPI report. The yield on the 10-year Treasury note jumped to 2.91% , its highest level since January 2014, while the yield on the 30-year bond rose to 3.17%. The Federal Reserve, under the new leadership of Jerome Powell, is on track to raise interest rates three times in 2018. If inflation continues to pick up, some investors think the Fed may add a fourth rate hike.

In Other News

Rating Agency Update

  • Moody's assigned Aa1 to State University of Iowa's Series 2018 Utility System Revenue Bonds. The outlook is stable.
  • Moody's affirmed Kalamazoo College's A1 rating. The outlook is revised from stable to negative.
  • Moody's affirmed Blinn College's A1 rating. The outlook is revised from negative to stable.
  • Moody's assigned A3 to Fairfield University's Series S Revenue Bonds. The outlook is stable.
  • S&P affirmed Polytechnic University of Puerto Rico's BBB- rating. The outlook is stable.
  • S&P affirmed Southern New Hampshire University's A rating. The outlook is stable.
  • S&P lowered Delaware State University's rating from A- to BBB+. The outlook is stable.
  • S&P affirmed Carlow University's BBB rating. The outlook is stable.
  • S&P lowered St. Michael's College's rating from BBB+ to BBB. The outlook is stable.
  • S&P assigned AA- to The University of Chicago's Series 2018A&B Revenue Bonds.