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
- Students at some of the nation's top universities are urging their schools to reconsider admissions policies that favor relatives of alumni. Campus groups for minority and low-income students at 13 universities issued a joint letter Wednesday asking their schools to review the impact of so-called legacy admissions policies.
- On Monday the White house released its budget proposal for fiscal year 2019 , providing an important window into the administration's views of the federal role in higher education.
- The federal spending deal signed into law by President Trump on Friday contains provisions that would exempt specific colleges from taxes and regulations governing higher education. The deal protects Berea College from a tax on its endowment earnings and exempts Southeast Kentucky Community and Technical College from a minimum performance threshold.
- Lawrence S. Bacow , a longtime academic leader with expertise in environmental policy and higher education, will be the next president of Harvard University. At a news conference Sunday afternoon, Bacow recognized the challenges facing higher education today, saying "some of the criticism is fair."
- The U.S. Department of the Treasury resumed the sale of State and Local Government Series Securities (SLGS) on Tuesday.
- Belmont University announced a plan Tuesday to acquire O'More College of Design, based in Franklin, Tennessee. The plan will merge the two schools' graphic design programs and add three others: fashion design, interior design, and fashion merchandising. The deal may be evidence of the trend of small colleges consolidating or contracting: in March, 2017 another Nashville area institution, Aquinas College, cut several programs, in a shift back to its roots training teachers for classrooms in Catholic schools.
- State lawmakers voted Tuesday to block efforts by Arizona cities and counties aimed at identifying and disclosing sources of money being funneled into their local elections through nonprofit groups.
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.