Strong economic and inflation data should not cause the Fed to change policy this week.

Strong data continued to be released last week and is expected this week. New home sales and the Leading Indicators were both up more than originally expected for March. New home sales reached a level not experienced since August 2006. The only weaker data was existing home sales as the inventory of homes on the market dropped below a two-month supply. This lack of inventory contributed to a surge in prices of 5.9% for the month and are up 17.2% YOY nationally. Demand remains well above supply and that will continue to drive prices higher until they reach a point that demand slows. The data due out this week is forecast to continue the rebound in economic activity. The Advance Report for Real GDP leads the data and is expected to be reported as having increased by 6.5% for the first quarter, up from the 4.3% gain already reported for the fourth quarter.