The detailed minutes of the January Federal Open Market Committee (FOMC) meeting noted that while they reaffirmed their long term 2% inflation goal some committee members saw longer run inflation slipping below 2% while other members suggested a target range rather than a specific number. The FOMC also noted strengthening in the labor market based on continued payroll gains and a steady workforce participation rate despite an aging population, but some members felt that employment was at its maximum while others felt that a lack of wage growth and a relatively low employment/population ratio for prime age workers indicated that there was still some slack in the labor market. The FOMC’s estimate of economic activity was higher than in the previous meeting, with gains in household and business spending boosting GDP higher than expected. However, it was noted that some spending might have been a temporary boost due to September’s hurricanes, and that the savings rate had declined, likely with expectations that household wealth would continue to rise. Odds for policy firming in their March meeting were surveyed at 85%, and odds for a rate increase from that meeting were similarly high.

The National Association of Realtors’ (NAR) Existing-Home Sales report for January showed existing home sales dropped -3.2% after December’s -3.6% drop, with yearly sales dropping  -4.8% for the largest decline since August 2014. Sales dropped in all regions, with the Midwest dropping the most at -6.0%, followed by the West (-5.0%), the Northeast (-1.4%), and the South (-1.3%). Yearly gains in sale prices were up 5.8% nationwide, to an average of $240,500, with regional prices increasing 8.8% for the West, 8.7% for the Midwest, 6.8% for the Northeast, and 4.3% for the South. The NAR noted increased buyer traffic for the month, and attributed the drop in sales to a lack of supply and the resultant increase in price.

Crude oil refineries operated at 88.1% capacity in the week ending 2/16/18, with input down by 329,000 barrels per day to 15.8 million barrels/day. For the week, crude oil imports averaged 7 million barrels/day, down -867,000 barrels/day, dropping commercial crude oil inventories by -1.6 million barrels. Gasoline production increased to 10.1 million barrels/day, while demand increased to 9.1 million barrels/day (+76,000 barrels/day for the week, +5.4% Y/Y). Gasoline prices declined to an average $2.557, with a $0.05/gallon drop for the week and a $0.255/gallon yearly gain. West Texas Intermediate (WTI) crude was $61.89/barrel, gaining $2.69 for the week and $8.48 for the year.