Good day. If the Federal Reserve runs into problems with the low interest rates it has helped to engineer, it might be because of asset prices and not consumer prices, the Journal's Jon Hilsenrath writes. Weeks after the U.K. split from the European Union, British companies are continuing to benefit from the continent’s cheaper borrowing costs, helped by the European Central Bank. And New York Fed President John Williams said he wasn't concerned about rising Treasury bond yields, which posted their biggest weekly gain in over a month last week as investors bet that the U.S. economy will gather strength. 

Now on to today’s news and analysis.

The Fed predicates its easy money policies in part on the fact that its favorite measure of inflation has run more than a half percentage point below its goal for several years. This raises an important question: Is the central bank thinking about inflation properly? The Fed defines its inflation target in terms of consumer prices, such as those we pay for cars, toothpaste and haircuts. But in recent decades, prices have often climbed much faster for investment assets, such as homes and stocks, and twice led to booms and busts followed by recessions.

• U.S. Treasury Yields Log Biggest Weekly Gains in Over a Month
• Fed's Rosengren: Vaccines Make Robust Second-Half Recovery Possible

• Midwest Labor Markets Shake Off Covid-19 Downturn
• U.S. Hiring Alliances Help Tens of Thousands Find Jobs

7 a.m.: Bank of Israel releases policy statement
9 a.m.: Dallas Fed’s Kaplan speaks at online International Energy Forum event
9:30 a.m.: European Central Bank’s Lagarde gives speech at virtual European Parliament conference on stability, economic coordination and governance in the EU
10 a.m.: Richmond Fed’s Barkin speaks virtually to Maryland Bankers Association
12 p.m.: Dallas Fed’s Kaplan speaks at virtual Garland, Texas, Chamber of Commerce event
3:30 p.m.: Fed’s Bowman and Dallas Fed’s Kaplan speak at Dallas Fed Advance Together Celebration virtual event

Time N/A: National Bank of Hungary releases policy statement
10 a.m.: Fed’s Powell testifies on monetary policy before Senate Banking Committee
12:30 p.m.: Bank of Canada’s Macklem gives speech via videoconference
8 p.m.: Reserve Bank of New Zealand releases policy statement and rate decision

It turns out a congressional hearing aimed partly at investigating stock-pumping on the internet is a great opportunity for, well, pumping stocks on the internet, Charley Grant writes for Heard on the Street. On YouTube, a fast-flowing comment section gave netizens opportunities to tout their favorite speculative stock, cryptocurrency, or even their favorite slightly radioactive commodity. In this online community, turning off the caps lock is optional, and rocket emojis are mandatory.

• U.S. existing-home sales rose 0.6% in January from December to a seasonally adjusted annual rate of 6.69 million, the National Association of Realtors said Friday. The January sales marked a 23.7% increase from a year earlier.
• The flash reading for the U.S. Composite Output Index edged up to 58.8 in February from 58.7 in January, IHS Markit said. Readings over 50 indicate improving conditions. (Dow Jones Newswires)
• Shares of small companies are outpacing their larger counterparts by the widest margin in more than two decades.
• Large North American pension funds, anxious to meet ambitious return targets in a low-yield world, have committed growing sums to both global private-equity managers active in China and managers local to China.
• If the Biden administration’s stimulus package comes in close to its proposed nearly $2 trillion, it will lift U.S. growth notably higher, J.P. Morgan economist Michael Feroli wrote in a note to clients. (DJN) 
• Retail sales in the U.K. fell 8.2% in January from December as nonessential retailers were closed for much of the month as part of the latest lockdown, Office for National Statistics data showed. (DJN)
• Copper futures topped $4 a pound on Friday for the first time since 2011, with expectations for a global economic recovery and a rise in renewable energy sources lifting the industrial metal's demand outlook. (DJN)
• Singapore's consumer-price index likely rose 0.1% on year in January, marking the first increase since February 2020, according to the median estimate in a WSJ poll of nine economists. (DJN) 

This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London. 

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