That low inflation rate leaves the Fed plenty of latitude to remain on hold, and reinforces our expectation that [a rate increase] is unlikely before the third quarter of 2004.

364

The consumer numbers look fairly strong, although at least some of that strength is likely to fade in coming months if housing continues to weaken. The mortgage applications data suggest home prices are already weakening.

213

The implication is that raw winter weather may have depressed starts last month, particularly late in the month. Even so, starts remained above the 2003 average [of] 1.85 million [units].

182

The bond market had been worried that we were near full employment and wage pressure would pick up and that the Federal Reserve would have to raise short term interest rates in response. But now that the all important employment cost index was up just 0.6 percent, the Fed doesn't need to raise short term rates because the economy is slowing down.

175

You typically see a rebound in the labor force when the economy starts to recover. But because businesses are operating so much more efficiently, there's a limit to the number of jobs available. Unemployment could still go up a few ticks.

173

It remains unclear, of course, what role economic data really are playing in markets just now. Despite evidence that the recovery continues both in the U.S. and abroad, equity markets continue to struggle.

158

Fed officials ... likely anticipated some fallout in fixed income markets. We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets.

127

Difficulties of seasonally adjusting the retail sector around year-end suggest that the two-month average -- about flat -- is a more reliable gauge of hiring trends.

118

We believe that the Fed will require both consistent solid hiring and a rise in inflation before it begins to lift rates.

112