While the S&P 500 closed higher on the week, it doesn’t look like market jitters have dissipated. Volatility, as measured by the CBOE’s VIX, reached its highest level since August, spiking at 31.95 on Wednesday, and closing Friday at 22.34.
Excess reserves of depository corporations that are parked with the Fed bounced back towards their peak, despite the Fed’s effort to drain liquidity. Similarly, yields on 10-year treasuries traded near 2 percent (see below).
Oil prices, as measured by front month contracts of WTI, reached a low of $26.19 a barrel, but closed Friday at $32.19. Newly released CPI data showed prices growing at 0.7 percent in December (see below), an increase of 0.3 percent over November, but still well below the 2 percent target.
On the exchange rate front, the dollar strengthened over sterling, the ruble, and the real. A fried who just returned from Brazil noted how relatively inexpensive a vacation from the U.S. to Brazil has become. With more than a foot of snow in Washington right now, opportunity costs are down, as well.