Dollars and Sense: Was this week the calm before a storm?

No fireworks. Last week I told you it was going to be fairly quiet this week. The economy was mostly as good as my word. We saw no major fireworks on the economic front or in Washington, D.C. The major stock indexes were flat on Monday. Volume on Monday was low with bond markets closed for Veterans Day. Stocks continued to drift—slightly downward—on Tuesday. The skittishness came as a result of a generally slow news day in the markets as well as a wait-and-see attitude before speeches by two Federal Reserve officials. Investors are trying to parse the words of both the Atlanta and Minneapolis Fed presidents, who spoke at separate events on Tuesday.

Yellen, but no yelling. The Federal Reserve Board was in the news for much of the week because of presidential nominee Janet Yellen’s confirmation hearing. She indicated she was going to continue the stimulus policies of her predecessor Ben Bernanke, which seemed to buoy the markets. Stocks turned higher on Wednesday, Thursday, and Friday, in part because of her testimony.

But that’s not all! We also got some good economic news. Some retailers have fiscal years that end in January rather than December to fully account for holiday sales, so a few big retailers report at the tailend of earnings season. Macy’s is one of them, and it beat expectations on both the earnings and revenue side—news that lifted the entire retail sector. The Macy’s revenue number was especially welcome news since revenue had been disappointing this quarter.

Turning a corner? We also got data from the Mortgage Bankers Association that applications for U.S. home loans dipped last week. That should have been bad news, but it was expected and already priced into the markets. Also helping soften the blow was the fact that the prior week's decline was revised to less of a decline than initially reported. The week ahead should give us a better idea of the housing market since we’ll get existing home sales numbers on Wednesday.

What about jobs? The Labor Department said the number of Americans filing first-time claims for unemployment benefits came in at 339,000. That number is a difficult to interpret. Most analysts say that a number below 350,000 means the economy is creating jobs. But—as we saw last week—the number of jobs the economy is creating hasn’t lowered the unemployment number, which actually ticked up a bit in the past month to 7.3 percent. As for last week’s number, it was a drop of 2,000 from the previous week, though still higher than analysts had expected. So the jobs picture still looks a bit grim, though hiring during the Christmas season might help out a bit there.

The week ahead. It’s going to be a pretty big week for economic news. In addition to the existing homes number I mentioned above, the Labor Department will release the Consumer Price Index on Wednesday. That number often moves the markets, and it’s an inflation indicator. If it starts going up, it could mean that the long-feared inflation the Fed stimulus program could produce is starting to show up. So far, we haven’t seen that happen, but you can be sure that this week’s number will be closely watched.