Markets will be focused on inflation data this week

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Published Date 8/12/2024

Markets began unchanged this morning ahead of a lot of economic news this week; the stock indexes in pre-opening trade were fractionally better but essentially unchanged from Friday. There isn’t much news today, later this afternoon Treasury will release its July budget. Inflation data leads this week, tomorrow July PPI and Wednesday July CPI, the estimates for PPI are unchanged from June except forecasts of a decline in In month/month, expected to have dipped from +0.4% to +0.2%. CPI, the more important report is expected to have increased month/month from -0.1% to +0.2%, core +0.2% from +0.1%, but year/year thought to be +3.2% from +3.3%.

The calendar is full of data points, mainly on Thursday. Nothing happened in the mid-east over the weekend, but the US is sending more weapons into the area, a sub, and another aircraft carrier group. The situation being watched closely by US and global markets. Iran has vowed to retaliate for Israel’s assassination of Hamas’ former political chief Ismail Haniyeh in Tehran on July 31.

At 9:30 am the DJIA opened +64, NASDAQ +64, S&P +14. 10 year at 9:30 am 3.96% +2 bp. FNMA 5.5 30 year coupon -2 bps from Friday’s close and -12 bps from 9:30 am Friday, the 6.0 coupon unchanged from Friday but -7 bps from 9:30 am Friday.

Fed Governor Michelle Bowman commented she isn’t yet ready to cut the FF at next month’s FOMC meeting. Markets laying a 50% of a cut after betting 85% after the July employment release. There is a lot of data between now and the FOMC meeting on the 18th of September. August employment, August PCE, August PPI and CPI, so don’t take comments from Fed officials completely serious now, they will all couch their comments with (it depends).

Not looking for improvement today, treasury rates should keep in a narrow trading through the day ahead of inflation news Tuesday and Wednesday.

This Week’s Economic Calendar:

Monday,

3 pm July Treasury Budget

Tuesday,

6 am July NFIB small business optimism index (91.7 from 91.5)

8:30 am July PPI month/month +0.2% unch from June, year/year +2.6% unch from June, core month/month +0.2% from +0.4% in June, year/year +3.0% unch from June

Wednesday,

7 am weekly MBA mortgage applications

8:30 am July CPI month/month +0.2% from -0.1% in June, year/year +3.0% unch from June; core +0.2% from +0.1% in June, year/year +3.2% from 3.3% in June

Thursday,

8:30 am weekly jobless claims 9234K from 233k

July retail sales (+0.3% from 0.0%, ex vehicles (+0.1% from +0.4%, ex vehicles and gas +0.3% from +0.8%)

August Philadelphia Fed manufacturing index (5.8 from 13.9)

July import and export prices (month/month -0.1% from 0.0%, export prices -0.1% from -0.5%)

August NY Empire State manufacturing index (-6.0 from -6.6)

9:15 am July industrial production and capacity utilization (production -0.1% from +0.6%, capacity utilization 78.6% from 78.8%)

10 am August NAHB housing market index (42, unch from July)

June business inventories (+0.3% from +0.5%)

Friday,

8:30 am July housing starts and permits (starts 1.342 million from 1.353 million; permits 1.430 million from 1.446 million)

10 am August prelim University of Michigan consumer sentiment index (67.0 from 66.4)

Source: TBWS

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