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It was a week that had random surprises. Congressional House leadership surprisingly is under change and Iraq is back in the news. And indicator news was not as expected. But despite the unexpected, markets weathered the news rather decently.
 This past week stocks retreated moderately after record highs for some indexes. At the start of the week, however, on a day with no economic news, investors focused on deal news. Investors remained buoyed by Friday's May employment gain and the European Central Bank's decision to further loosen monetary policy. Benchmark indexes hit record highs. On Tuesday, momentum slowed as equities were virtually unchanged although the Dow nudged up to another record high while the S&P 500 edged down incrementally. Traders focused mostly on corporate news with Facebook and Netflix gaining on the day but shares of eBay retreating after news late Monday that David Marcus, who has led eBay's fast growing payments unit PayPal for the past two years, will step down to run Facebook's messaging products.
 At mid-week, traders were unsettled by the surprising primary election defeat of Republican majority leader Eric Cantor by an upstart candidate from the Tea Party movement as a signal to be cautious, leading to market weakening. Also, a lowered World Bank growth forecast gave investors a reason to sell some stocks. Late Tuesday, the World Bank cut its global economic growth forecast for 2014 to 2.8 percent from 3.2 percent due to the impact of the Ukraine crisis and a harsh US winter.
Thursday, stocks dipped on disappointingly low retail sales and a slight increase in initial jobless claims. Adding to the downdraft in the afternoon were comments by President Obama that he refused to rule out U.S. action in Iraq against Sunni Islamist militants who have surged out of the north toward Baghdad, threatening to divide the country. Worries about oil supplies impacted stocks as well as oil prices.
However, the week did end on a positive note—Friday, the 13th, was not scary for investors despite economic news. Producer prices were unexpectedly week and consumer sentiment slipped. But equities made a mild comeback on bottom fishing and the reality that there's essentially nowhere else to get returns.
Equities were down this past week. The Dow was down 0.9 percent; the S&P 500, down 0.7 percent; the Nasdaq, down 0.2 percent; the Russell 2000, down 0.2 percent; and the Wilshire 5000, down 0.6 percent.
For the year-to-date, major indexes are mostly up as follows: the Dow, up 1.2 percent; the S&P 500, up 4.8 percent; the Nasdaq, up 3.2 percent; and the Wilshire 5000, up 4.2 percent. The Russell 2000 is down 0.1 percent.
Weekly percent change column reflects percent changes for all components except interest rates. Interest rate changes are reflected in simple differences.
 Despite a week of unexpected news, Treasury yields changed only modestly net for the week. No daily moves were particularly sharp. Rates firmed Monday on belief that upcoming labor market news would show improvement—notably upcoming JOLTS and jobless claims. Rates gained modestly Tuesday on signs that the recovery is improving. The NFIB small business optimism index rose, JOLTS' job openings jumped (though detail was underwhelming), and businesses boosted inventories, apparently in hopes of stronger demand.
 Rates eased marginally each of the next two days. Yields slipped Wednesday after the 10-year auction attracted less demand than expected and on little economic news. Rates declined moderately Thursday after jobless claims unexpectedly rose slightly instead of dipping as forecast. Also, retail sales came in below expectations. Rates were little changed Friday.
For this past week Treasury rates were mostly up as follows: the 2-year note, up 5 basis points; the 5-year note, up 5 basis points; the 7-year note, up 2 basis points; and the 10-year note, up 2 basis points. The 3-month T-bill was unchanged at each daily close during the week while the 30-year bond slipped 2 basis points for the week.
 The spot price of West Texas Intermediate jumped sharply this past week.
The only notable daily swings were upward on Monday and Thursday. Crude rose about $1-3/4 per barrel Monday on signs of stronger global economic growth as China's exports rose more than forecast. Also, worries about political discord in Libya put upward pressure on prices.
 Thursday, the center of attention was Iraq as WTI spiked almost $2-1/2 per barrel. Traders worried about oil supplies as militants linked to al-Qaeda spread control over Mosul. Also, the Iraqi oil minister said that the U.S. might intervene with air strikes and U.S. President Obama said he would not rule out intervention (but not involving U.S. ground troops).
Net for the week, the spot price for West Texas Intermediate jumped $4.10 per barrel to settle at $106.87. This was the highest settle since the $106.91 mark for July 22, 2013.
The bottom line is that monthly data have been volatile—notably for consumer spending and producer prices. Traders and investors should be doing a lot of averaging of recent numbers instead of focusing on just one month.
 Retail sales in May fell short of expectations but upward revisions made the latest report actually a little upbeat. May retail sales disappointed but upward revisions to April numbers were partly offsetting. Retail sales rose 0.3 percent in May, following a 0.5 percent jump the month before (originally up 0.1 percent). Market expectations were for a 0.6 percent gain in May.
Strength was in motor vehicles which jumped 1.4 percent in May after a rise of 0.9 percent the prior month. Excluding motor vehicles sales edged up 0.1 percent, following a boost of 0.4 percent in April (originally flat). Forecasts were for 0.4 percent. Excluding motor vehicles and gasoline, sales were flat in May after a 0.3 percent increase the month before. Analysts expected 0.5 percent for May.
 Outside of the core, strength was led by a 1.8 percent rebound in miscellaneous store retailers, following a 1.4 percent drop in April. Also, building materials & garden equipment was up 1.1 percent after 1.9 percent. Furniture & home furnishings sale were healthy in May. These latter two components hint at improvement in housing starts.
Weakness in May was led by clothing & accessories which declined 0.6 percent but followed a 1.2 spike in April.
The latest report is not as disappointing as when just looking at the May headline number versus expectations. The April revisions were significantly upward. Also, the auto component came in far lower than the industry number for unit new motor sales-up a monthly 4.6 percent. The retail sales sample for autos is small and the BEA uses the industry number for PCEs and GDP. So, with upward revisions and strong motor vehicle sales, second quarter GDP still looks moderately healthy and the consumer sector is moderately healthy on average.
It's a maybe but a rise in April business inventories may suggest that businesses are expecting a moderate rise in demand in coming months—emphasis on moderate.
 Inventory build, at a higher-than-expected 0.6 percent, was strong and right in line with sales. April's build was the largest of the year and points to an inventory contribution for second-quarter GDP.
Sales in the report rose 0.7 percent, keeping the inventory-to-sales ratio at a lean 1.29.
Components were led by wholesalers who have been building up inventories aggressively coming out of the heavy winter. Manufacturers and retailers have also been building up inventories. Given that holding inventories has an interest rate cost, businesses are likely to be believe that demand will pick up and more than offset interest cost.
The inventory report adds to the argument that second quarter GDP growth will be moderately strong.
 There is another measure showing improvement in the labor market. But the headline number may be misleading. There were 4.455 million job openings on the last business day of April, up from a revised 4.166 million in March (previously estimated at 4.014 million), the U.S. Bureau of Labor Statistics reported. This was notably above the consensus projection which called for 4.025 million job openings in April with the miss heavily affected by the upward revision to March
The number of job openings rose for total private and was little changed for government. In retail trade and in arts, entertainment, and recreation, the number of job openings increased in April. The number of openings also increased in the Midwest region in April.
 Despite the jump in job openings rate, hires were dead in the water. The hires rate (3.4 percent) and separations rate (3.3 percent) were unchanged in April. Within separations, the quits rate (1.8 percent) and the layoffs and discharges rate (1.2 percent) were unchanged in April. In April, hires posted at 4.708 million-marginally higher than 4.706 million in March-up only 2,000 for the latest month. There were 4.496 million total separations in April, essentially unchanged from March's 4.491 million.
The latest JOLTS numbers show improvement in the labor market in terms of openings but it is not enough to inspire the Fed to move away from loose monetary policy. Hires are soft and BLS payroll gains have decelerated. Additionally, the ongoing story of businesses not being able to find qualified workers may explain the April divergence between openings and hires.
 The headline looks soft, at a lower-than-expected 81.2, but some of the details are positive in the consumer sentiment report, especially a gain for current conditions. The current conditions component was up 1.0 point from final May to 95.4. This offers an early signal of steady strength, if not a slight increase in strength, for June consumer activity.
 Weakness in the report, what little there is, is in the expectations component which was down 1.5 points to 72.2. Expectations usually center on job and income prospects, which right now remain weak links in the economic outlook.
Inflation expectations remain subdued with 1-year expectations down a sizable 3 tenths to 3.0 percent and up 1 tenth to 2.9 percent for the 5-year outlook. The decline in the 1-year outlook surprisingly comes against high gas and rising food prices.
The consumer may not be that optimistic but isn't depressed either.
 At the producer level, inflation is a problem-but in the other direction. May PPI inflation turned negative-meaning reduced revenues for producers. The PPI for total final demand declined 0.2 percent, following an increase 0.6 percent in April. Market expectations were for 0.1 percent. Total final demand excluding food & energy slipped 0.1 percent after gaining 0.5 percent in April. Analysts forecast a 0.1 percent rise.
Total final demand excluding food, energy, and trade service was flat after a 0.3 percent increase in April.
Energy dipped 0.2 percent in May after a 0.1 percent rise the month before. Foods declined 0.2 percent, following a 2.7 percent spike in April.
 Prices for final demand services moved down 0.2 percent in May, the first decrease since a 0.3-percent drop in February. Most of the decline in May is attributable to the index for final demand trade services, which fell 0.5 percent. The index for final demand goods fell 0.2 percent in May, the largest decrease since a 0.7-percent drop in April 2013. In May, prices for final demand energy and final demand foods both declined 0.2 percent. The index for final demand goods less foods and energy was unchanged. In May, gasoline prices fell 0.9 percent, accounting for about half of the decline in the final demand goods index.
On a seasonally adjusted year-ago basis, PPI final demand was up 2.0 percent in May compared to 2.1 percent in April. Excluding food & energy, this series was up 2.0 percent versus 1.8 percent in April.
The latest PPI report will ease inflation fears at the Fed somewhat. The monthly volatility factor certainly will be noticed. However, 12-month rates are not soft. Still, taper likely remains on schedule.
The consumer sector is mixed. While job growth has been sluggish, consumer confidence about job security has improved (for those employed) and has resulted in moderate opening of the consumer wallet. Inflation has been oscillating but gradually moving up, likely leaving Fed taper on schedule.
This week's highlights are the FOMC decision Wednesday, the FOMC quarterly forecasts, and the chair press conference after the decision. Fed taper is expected to remain on course with another $10 billion reduction in bond purchases. What is new is how newly appointed Fed Board members fit in and affect the tone of policy—likely dovish but really not known yet. For indicators, there are key updates for manufacturing and housing. Industrial production has shown recent signs of new life—including production worker hours and manufacturing surveys. Housing has been a tough read—average flat recently except for gains in the multifamily component. Lift in the single-family component in starts or permits could boost equities but it is a big question mark.
The Empire State manufacturing index in May posted a 17.7-point surge to 19.01 in a standout signal for spring momentum in the manufacturing sector. This was the highest level since June 2010. In another rarity, the latest report was led by employment, up nearly 13 points to 20.88 in a gain that points to business confidence in the outlook. And confidence in the outlook for general conditions is enormously strong, up nearly 6 points to 43.96. Other details show less strength but are still very convincing, including a more than 13 point gain in new orders to 10.44. Shipments, at 17.44, were very strong and underscore the need for labor.
Empire State Manufacturing Survey Consensus Forecast for June 14: 15.0
Range: 12.0 to 17.0
Industrial production in April disappointed with a notable decline but perhaps expectations were too high after strong gains the prior two months. April industrial production declined 0.6 percent, following gains of 0.9 percent in March and 1.1 percent in February. By major components, manufacturing decreased 0.4 percent, following increases of 0.7 percent in March and 1.5 percent in February. For the latest month, manufacturing excluding motor vehicles fell 0.4 percent after advancing 0.7 percent in March and 1.2 percent in February. Mining increased 1.4 percent after a 2.0 percent boost in March. The spring thaw effect did come into play as warmer weather followed an atypically harsh winter. Utilities plunged 5.3 percent in April, following a 0.6 percent rise the month before. Capacity utilization declined to 78.6 percent from 79.3 percent in March. Looking ahead, production worker hours in manufacturing were up a sharp 0.8 percent for the month, suggesting a sizeable gain in the manufacturing component for May industrial production.
Industrial production Consensus Forecast for May 14: +0.5 percent
Range: +0.3 to +0.8 percent
Manufacturing production component Consensus Forecast for May 14: +0.6 percent
Range: +0.3 to +0.8 percent
Capacity utilization Consensus Forecast for May 14: 78.9 percent
Range: 78.7 to 79.1 percent
NAHB housing market index for May fell 1 point to 45. The new home market, held down by high prices and low supply of units, appears to be stalling further, not accelerating, as the spring unfolds. And weakness was centered in current sales, down 2 points to 48 in a reading that points to further trouble for new home sales. But expectations for future sales were strong, up 1 point to 57, while traffic is weak but improving, up 2 points to 33. Breakdowns show mid-to-high 40 readings for all regions except for the Northeast which was by far the smallest region for new home sales and is lagging badly.
NAHB housing market index Consensus Forecast for June14: 47
Range: 45 to 52
The consumer price index in April was bumped up by energy as headline inflation posted at 0.3 percent rise after increasing 0.2 percent in March. Excluding food and energy, CPI inflation came in at 0.2 percent, equaling the pace of March. The energy component rebounded 0.3 percent in April, following a 0.1 percent dip in March. Gasoline jumped 2.3 percent after declining 1.7 percent in March. Food gained 0.4 percent in each of the latest two months. Within the core, new vehicles increased 0.3 percent in April while used cars rose 0.5 percent. Education saw a 0.4 percent boost. Food & beverages increased 0.4 percent. Owners' equivalent rent rose 0.2 percent. On the soft side, apparel was flat along with "other." After last week's weaker-than-expected PPI number on Friday, trader views on CPI expectations may have been nudged down below analysts' forecasts released prior to the PPI release.
CPI Consensus Forecast for May 14 +0.2 percent
Range: +0.1 to +0.3 percent
CPI ex food & energy Consensus Forecast for May 14: +0.2 percent
Range: 0.0 to +0.3 percent
Housing starts advanced notably more than expected in April with a 13.2 percent monthly jump, after rising 2.0 percent the month before. The 1.072 million unit pace was up 26.4 percent on a year-ago basis and was the highest level since November. But the April surge was all multifamily which surged a monthly 39.6 percent, following a 10.6 percent drop in March. Multifamily is a volatile component. All units are counted as started when one unit is started. There probably still is spring thaw effect. The single-family component edged up 0.8 percent in April, following a 9.3 percent jump the prior month. Housing permits gained 8.0 percent, following a 1.1 percent dip the prior month. The annualized rate of 1.080 million units topped expectations for 1.020 million units and was up 3.8 percent on a year-ago basis. Again, strength was in the multifamily component which was up 19.5 percent while the single-family component rose a modest 0.3 percent.
Housing starts Consensus Forecast for May 14: 1.036 million-unit rate
Range: 0.995 million to 1.072 million-unit rate
Housing permits Consensus Forecast for May 14: 1.062 million-unit rate
Range: 1.020 million to 1.102 million-unit rate
The U.S. current account deficit, helped by stronger exports, narrowed sharply in the fourth-quarter of 2013, to $81.1 billion from a revised $96.4 billion in the third quarter. The gap on goods & services narrowed by $7.6 billion in the quarter to $113.9 billion. A big plus here is the balance on services, at a positive $57.9 billion for a $1 billion raise and reflecting strong demand for information and management services. Also helping was a $5.3 billion rise in the surplus on income and a $2.4 billion easing in the deficit on unilateral transfers. In more good news, the current account as a percentage of GDP fell a sharp 4 tenths to 1.9 percent.
Current account Consensus Forecast for Q1 14: -$99.8 billion
Range: -$108.0 billion to -$93.0 billion
The FOMC announcement at 2:00 p.m. ET for the June 17-18 FOMC policy meeting is expected to policy rates unchanged. Scheduled Fed taper is forecast to continue with another $10 billion monthly reduction in bond purchases. Also, the Fed will release its quarterly forecasts at the same time as the statement. There likely will be a cut in the forecast for GDP growth for 2014 due to first quarter effects from adverse weather.
FOMC Consensus Forecast for 6/18/13 policy vote on fed funds target range: unchanged at a range of zero to 0.25 percent
Chair press conference after the FOMC meeting statement is scheduled for 2:30 p.m. ET. Fed Chair Janet Yellen conducts a press conference after FOMC meetings in which participants present their quarterly economic forecasts. Yellen is expected to comment on the forecast and take Q&A.
Initial jobless claims rose 4,000 in the June 7 week to 317,000 with the 4-week average up 4,750 to a 315,250 level, however, that is down about 10,000 against the month-ago comparison. Continuing claims, in lagging data for the May 31 week, rose 11,000 to 2.614 million. The 4-week average, however, was down 13,000 to a new recovery low of 2.622 million.
Jobless Claims Consensus Forecast for 6/14/14: 313,000
Range: 295,000 to 315,000
The general business conditions index of the Philadelphia Fed's Business Outlook Survey came in at 15.4 in May to indicate nearly as strong monthly growth as April's 16.6. Details show less but still very solid strength vs April. Growth in new orders is down more than 3 points to a still very respectable 10.5 while shipments also slowed, down 8.5 points to a still strong 14.2. Employment, like Empire State, is a plus, up nearly 1 point to 7.8 which is very solid for this reading.
Philadelphia Fed survey Consensus Forecast for June 14: 13.0
Range: 10.0 to 19.0
The Conference Board's index of leading indicators slowed in April to a still strong 0.4 percent from an upwardly revised and outsized gain of 1.0 percent in March. The Fed's near-zero rate policy, reflected in the yield-spread component, was once again the biggest positive followed this time, however, by very welcome strength out of the housing sector with a big surge in building permits. The other eight components, however, were narrowly mixed with credit showing some strength and the factory workweek showing weakness. Other readings include a slowing in the coincident index to plus 0.1 percent from plus 0.3 percent and a slowing in the lagging index to plus 0.2 percent from a very strong 0.7 percent in March.
Leading indicators Consensus Forecast for May 14: +0.6 percent
Range: +0.2 to +0.7 percent
Quadruple Witching
R. Mark Rogers is the author of The Complete Idiot's Guide to Economic Indicators, Penguin Books.
He can also be found on a weekly broadcast talking about the U.S. economy, the easiest way to find him is by going to iTunes and searching for "Simply Economics."
Econoday Senior Writer Mark Pender contributed to this article.
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