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Fed's Favorite Inflation Metric to Release on Friday
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This being the final full week of the month, on Friday morning we’ll get the latest Personal Consumption Expenditures (PCE) report, for August. This is the preferred metric for gauging inflation by the Fed, as Chair Jerome Powell has said many times. It will be the first of many reports under consideration before the Fed’s next meeting, in the days following this year’s General Election in the U.S.
Pre-market futures had been giving back some of their gains made over last week, when it celebrated a 50 basis-point (bps) cut and sent the Dow to all-time closing highs on Friday afternoon. But currently, the Dow is up another +26 points, the S&P 500 +10 and the Nasdaq +63 points.
Things to Watch This Week
Aside from threats of a government shutdown on Capitol Hill this week and an ongoing strike among Boeing (BA - Free Report) factory workers, S&P flash PMI releases for both Manufacturing and Services are expected later today. Even though this is not the most consequential week for economic data — not counting Friday’s PCE report — we’ll still see Case-Shiller home prices and Consumer Confidence tomorrow, New and Pending Home Sales, Durable Goods Orders and a final revision to Q2 GDP.
For the PMI report today, Services are expected to tick down to 55.4 from 55.7 reported a month ago. This is still nicely over the 50-mark, which indicates growth. Manufacturing, however, is expected to come in at 48.4 — notably below that 50-line. The good news here is that this would be up from 47.9 reported last month.
Fed Members Make Speeches All This Week
Based on the new rate-cutting cycle, what may be most important to investors this week are the vast amounts of commentary coming from members of the Fed after last week’s 50 bps cut to 4.75-5.00% on the Fed funds rate. Fed Chair Powell is expected to make one appearance, on Thursday morning of this week.
The only voting member to deviate slightly last week was Fed Governor Michelle Bowman, who advocated a 25 bps cut instead. Ms Bowman speaks publicly tomorrow, Thursday and Friday. Later today, we’ll hear from Atlanta President Raphael Bostic, Chicago President Austan Goolsbee and Minneapolis’ Neel Kashkari.
Further, Fed Governor Adriana Kugler makes two addresses: one on Wednesday and one with Boston Fed President Susan Collins Thursday. Also, New York President John Williams, Fed Governor Lisa Cook and Vice Chair for Supervision Michael Barr all speak later this week, the latter with Mr Kashkari.
By the end of this week, we should have a thorough understanding of where the Fed’s mindset currently is. We expect concerns to shift toward labor growth and away from inflation, which looks to have been curbed sufficiently for the time being. Whether a majority of these speakers will favor another 50 bps cut on its November 8th meeting is too early to know right now.
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Fed's Favorite Inflation Metric to Release on Friday
This being the final full week of the month, on Friday morning we’ll get the latest Personal Consumption Expenditures (PCE) report, for August. This is the preferred metric for gauging inflation by the Fed, as Chair Jerome Powell has said many times. It will be the first of many reports under consideration before the Fed’s next meeting, in the days following this year’s General Election in the U.S.
Pre-market futures had been giving back some of their gains made over last week, when it celebrated a 50 basis-point (bps) cut and sent the Dow to all-time closing highs on Friday afternoon. But currently, the Dow is up another +26 points, the S&P 500 +10 and the Nasdaq +63 points.
Things to Watch This Week
Aside from threats of a government shutdown on Capitol Hill this week and an ongoing strike among Boeing (BA - Free Report) factory workers, S&P flash PMI releases for both Manufacturing and Services are expected later today. Even though this is not the most consequential week for economic data — not counting Friday’s PCE report — we’ll still see Case-Shiller home prices and Consumer Confidence tomorrow, New and Pending Home Sales, Durable Goods Orders and a final revision to Q2 GDP.
For the PMI report today, Services are expected to tick down to 55.4 from 55.7 reported a month ago. This is still nicely over the 50-mark, which indicates growth. Manufacturing, however, is expected to come in at 48.4 — notably below that 50-line. The good news here is that this would be up from 47.9 reported last month.
Fed Members Make Speeches All This Week
Based on the new rate-cutting cycle, what may be most important to investors this week are the vast amounts of commentary coming from members of the Fed after last week’s 50 bps cut to 4.75-5.00% on the Fed funds rate. Fed Chair Powell is expected to make one appearance, on Thursday morning of this week.
The only voting member to deviate slightly last week was Fed Governor Michelle Bowman, who advocated a 25 bps cut instead. Ms Bowman speaks publicly tomorrow, Thursday and Friday. Later today, we’ll hear from Atlanta President Raphael Bostic, Chicago President Austan Goolsbee and Minneapolis’ Neel Kashkari.
Further, Fed Governor Adriana Kugler makes two addresses: one on Wednesday and one with Boston Fed President Susan Collins Thursday. Also, New York President John Williams, Fed Governor Lisa Cook and Vice Chair for Supervision Michael Barr all speak later this week, the latter with Mr Kashkari.
By the end of this week, we should have a thorough understanding of where the Fed’s mindset currently is. We expect concerns to shift toward labor growth and away from inflation, which looks to have been curbed sufficiently for the time being. Whether a majority of these speakers will favor another 50 bps cut on its November 8th meeting is too early to know right now.