Stocks closed higher on Friday and for the week.

Friday's better than expected Personal Consumption Expenditures (PCE) Index, which showed headline inflation fell by -0.2% m/m, while increasing only 5.0% y/y vs. last month's pace of 5.5%, lifted stocks. The core rate was up 4.4% y/y vs. last month's pace of 4.7%.

With the Consumer Price Index (CPI), the Producer Price Index (PP), and now the Personal Consumption Expenditures (PCE) Index, all showing inflation on the decline, it's widely expected the Fed will raise rates by only 25 basis points at the conclusion of their 2-day FOMC meeting on Wednesday, February 1.

While the market sees this as all but certain, the real question is how high will they continue to push rates this year? At their last meeting, they hinted that the terminal rate could get as high as 5.10%. Since then, some Fed officials have suggested the Fed might need to go even higher.

In spite of that, fed fund traders are speculating that the Fed will call it quits between 4.75% ? 5.00%.

If they raise rates by 25 bps as expected, that would put the midpoint at 4.63%. And they would only need to raise rates by another 25 basis points for each of the next two meetings to get to their projected target of 5.10%. If the fed fund traders are right, that would mean only one more 25 bps hike after this one.

Additionally, aside from how high will rates go, is how long will they stay there? And, of course, how far will the Fed go in paring down their balance sheet?

It's unlikely we'll get any definitive answers on those questions. But investors will be listening closely to see if there?s any change in their estimates on those topics.

In the meantime, we've got several economic reports to get thru first starting with today's Dallas Fed Manufacturing Survey. And then Tuesday's Employment Cost Index, the Case-Shiller Home Price Index, the Chicago PMI, and the Consumer Confidence report.

We've also got plenty of companies set to report earnings with as many as 76 companies on deck for today, and another 76 on deck for tomorrow.

With just two more trading days to go, stocks are on pace to close out one of their best January's in years.

And as they say, "as January goes, so goes the year."

See you tomorrow,