The ongoing rally in equities just keeps chugging along. The S&P 500 logged its third consecutive week of gains, inching closer to its all-time high of 1,565.15, a number last reached in the fall of 2007.

The S&P 500 closed the week at 1,560.70, up 0.66% from last Friday. The yield on the 10-year U.S. Treasury note rallied .05%, closing on Friday at 1.99%. Gold closed the week at $1,591.95 per troy ounce, up .83%.

Powering the impressive run in stock prices is investors’ willingness to assume a greater level of investment risk. In market parlance, this remains a “risk-on” environment. This appears to be driven by confidence that central banks such as the U.S. Federal Reserve and European Central Bank will continue to provide significant liquidity to the financial system and have successfully mitigated extreme “tail risk” events for the foreseeable future.

Federal Reserve officials will meet again on Tuesday and Wednesday of next week, but they are not expected to make any changes to current interest rate policy.

Please be aware, though, that volatility in the markets could be set to rise in coming weeks as budget talks begin to heat up again in the nation’s capital.

A relatively active week of U.S. economic data releases confirmed the economy remains on a relatively slow-growth trajectory.

Retail sales for February climbed a much higher-than-expected 1.1%, the largest gain in five months, as recent employment gains appear to be overwhelming the impact of the recent payroll tax hike and elevated gasoline prices. However, consumer confidence, as measured by a University of Michigan survey, fell to its lowest level since December 2011 despite expectations of a slight increase. The survey may reflect consumer concerns surrounding the recent federal budget sequester rhetoric and the recent increase in gasoline prices.

Inflation at the wholesale and consumer levels, as measured by the U.S. Labor Department, were impacted by higher energy costs in February. Both the Producer Price Index (PPI) and the Consumer Price Index (CPI) rose 0.7% for the month, driven by the largest jump in gasoline prices in over three years. Analysts had expected the PPI to rise 0.7% and the CPI by 0.5%. That the “core” versions of both inflations measures, which strip out more volatile food and energy prices, remained quite low at 0.2% will be looked at favorably by most Federal Reserve policymakers.

Industrial production for February increased by a better-than-expected 0.7%, the highest in three months, driven by rise in manufacturing output.

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