This Full Trading Week May Decide the Direction of the Markets for the Rest of 2023
Inflation will be a big focus this week as the CPI, PPI, and import and export prices for June will be released in this order at 8:30 on the last three days of the week. These economic reports are the final inflation readings the Federal Reserve will get before its July 25-26 meeting. The Beige Book also has the ability to alter market sentiment as this is a large part of the data and discussions used at the FOMC meeting. The Beige Book, which is information from each Fed reporting district, is released on Wednesday afternoon.
Monday 7/10
• 10:00 AM ET, The second estimate of Wholesale Inventories is a 0.1 percent draw, unchanged from the first estimate.
• 10:00 AM ET, Mary Daley the President of the San Francisco Fed, will be speaking.
• 3:00 PM ET, Consumer Credit is expected to show that consumers borrowed $20 billion more in May. This compares to a $23 billion increase in April.
Tuesday 7/11
• 6:00 AM ET, The National Federation of Independent Business (NFIB) optimism index has been below, and often far below, the historical average of 98 for the past 17 months. June’s consensus is 89.8 versus 89.4 in May.
Wednesday 7/12
• 8:30 AM ET, The Consumer Price Index, or CPI, is expected to show that core prices in June are slowed to a modest 0.3 percent on the month versus May’s 0.4 percent. Overall prices are also expected to rise 0.3 percent. Annual rates are expected to slow sharply at the headline level, to 3.1 from 4.0 percent, and also for the core, to 5.0 from 5.3 percent.
• 10:00 AM ET, The Atlanta Fed Business Inflation Expectations is not one of the more widely watched inflation reports. But in these times of the markets grasping on anything that may foretell where inflation is headed, this number has the potential to be impactful.
• 10:30 AM ET, The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the US, whether produced here or abroad. The inventory level impacts prices for petroleum products.
• 2:00 PM ET, The Beige Book is a report on economic conditions used at FOMC meetings. This publication is produced roughly two weeks before the monetary policy meetings of the FOMC.
Thursday 7/13
• 8:30 AM ET, Employment numbers seemed to be the new razor-sharp focus among Fed watchers. Initial claims for the prior week are expected to be at the 248,000 level.
• 8:30 AM ET, Producer prices in June are expected to rise 0.2 percent on the month versus a 0.3 percent fall in May. The annual rate in June is seen at plus 0.4 percent versus May’s plus 1.1 percent. June’s ex-food ex-energy rate is seen at 0.2 percent on the month and 2.8 percent on the year which would exactly match May’s results.
• 4:00 PM ET, Fed’s Balance Sheet data is expected to show that the Fed holds $8.98 trillion in US debt. The total assets are forecast to drop by $42,602 billion.
Friday 7/14
• 10:00 AM ET, the Consumer SentIment first indication for July, is expected to rise to 65.0 from June’s surprisingly high 64.4.
What Else
Last week the BLS reported the US economy added 209,000 jobs in June. This helped cause the unemployment rate to fall to 3.6%, near its 50-year low. This spurred inflation worries and spooked the bond market, which in turn impacted the broader stock market. Looking at the make-up of the numbers may be less worrisome. It seems the US government has been the last to begin hiring after the pandemic. Excluding government hiring, private sector payrolls grew by only 149,000 in June. This is the slowest since December 2019 and below the 166,000 monthly average in 2017-19.
So the reaction may have been more of a reason for the market to take a breather after a strong June, than increased concern over a hot job market.
Managing Editor, Channelchek