Week Ahead: Economic Indicators (US)
For the January 13th week, here is a list of the major economic indicators released during the US Session.
Tuesday 14th January
08:30 ET
US PPI for December
The US Producer Price Index measures the average change in selling prices received by domestic producers for their goods and services over time. It serves as an indicator of inflation at the wholesale level before it reaches consumers.
It is typically released monthly by the US Bureau of Labor Statistics (BLS).
It tracks price changes from the perspective of sellers, including goods, services, and construction.
Types: It is often broken down into headline PPI (all items) and core PPI (which excludes volatile food and energy prices).
A rising PPI suggests increasing costs for producers, which could lead to higher consumer prices (inflation). A falling PPI indicates lower wholesale prices, possibly reflecting weaker demand.
PPI is a valuable economic indicator for understanding inflation trends and supply chain pressures.
What to Expect
If PPI comes in higher than expected, indicating the potential for higher CPI, we would expect to see weakness in US stocks, and strength in the dollar and government bond yields, as this would cause markets to pull back further on bets for further Fed interest rate cuts, as rates may need to stay higher for longer in this environment to make sure inflation is coming sustainably down to the Fed’s target.
If PPI came in lower than expected, we would expect strength in US stocks, and weakness in the dollar and government bond yields, as this would indicate that inflation is continuing to come down to the Fed’s target, which could increase the likelihood that the Fed can move forward with further interest rate cuts.
Wednesday 15th January
08:30 ET
US CPI for December
The US Consumer Price Index (CPI) is a key measure of inflation that tracks the average change in prices paid by consumers for a basket of goods and services over time. It reflects the cost of living and is used to assess price stability in the economy.
Released monthly by the US Bureau of Labor Statistics (BLS)
CPI measures the price changes in categories like housing, food, transportation, medical care, and energy.
Headline CPI: Includes all items in the basket, including food and energy.
Core CPI: Excludes volatile food and energy prices to give a clearer view of underlying inflation trends.
Rising CPI indicates inflation, which erodes purchasing power, while a decline suggests deflation, which may signal economic weakness.
Policymakers use CPI to guide monetary policy decisions.
CPI is one of the most closely watched economic indicators.
What to Expect
If CPI comes in higher than expected, we would expect to see weakness in US stocks, and strength in the dollar and government bond yields, as this would cause markets to pull back further on bets for further Fed interest rate cuts, as rates may need to stay higher for longer in this environment to make sure inflation is coming sustainably down to the Fed’s target.
If CPI came in lower than expected, we would expect strength in US stocks, and weakness in the dollar and government bond yields, as this would indicate that inflation is continuing to come down to the Fed’s target, which could increase the likelihood that the Fed can move forward with further interest rate cuts.
10:30 ET
Weekly EIA Crude Oil Inventories
The US Weekly EIA Crude Oil Inventories report, released by the Energy Information Administration, measures the weekly change in the amount of crude oil held in US commercial storage facilities.
It’s a key indicator for energy markets, as it reflects the balance between oil supply and demand.
What to Expect
An increase in inventories suggests lower demand or higher production, often putting downward pressure on oil prices, while a decrease can indicate higher demand or reduced production, typically pushing prices up.
Thursday 16th January
08:30 ET
US Retail Sales for December
US Retail Sales measure the total receipts of retail stores across the United States, reflecting consumer spending on goods such as food, clothing, electronics, and automobiles. It is a key economic indicator because consumer spending accounts for a significant portion of the US economy.
Published monthly by the US Census Bureau.
Covers various retail sectors, including online sales, restaurants, and brick-and-mortar stores.
Core Retail Sales excludes volatile categories like automobiles and gasoline to provide a clearer view of underlying trends.
It provides an indicator of the strength of consumer spending, which drives economic growth.
Higher retail sales suggest economic expansion, while lower sales may signal slower growth or recessionary pressures.
Retail sales data can influence financial markets, business decisions, and monetary policy.
What to Expect
With Retail Sales, investors are looking at 2-sided impacts on the markets.
If Retail sales come in higher than expected, this could indicate higher inflationary pressure, which could cause weakness in stocks and strength in the dollar and government bond yields.
However, higher retail sales would also indicate a strong consumer, which could feed into higher corporate profits and higher US GDP, looking at it from this angle could cause strength across all assets (US stocks, the dollar, and government bond yields).
If they come in lower than expected, this could be seen as a downside risk to inflation, which could cause strength in US stocks and weakness in the dollar and government bond yields, but it could also increase chances of lower GDP and corporate profits, which could cause weakness across US assets.
Ultimately, equities may see a more mixed reaction when reacting to these numbers based on the 2 different angles that the data could be digested at this stage in the economic cycle, however, the dollar and government bond yields are more likely to see a more consistant/stable reaction.
US Initial Jobless & Continuing Claims
The US Weekly Initial & Continued Jobless Claims report tracks unemployment insurance claims to gauge the health of the job market. Initial claims measure the number of people filing for unemployment benefits for the first time, indicating new job losses.
Continued claims reflect the number of individuals who remain unemployed and are still receiving benefits after their initial filing.
Together, these metrics provide timely insights into labor market conditions and potential economic shifts.
What to Expect
With employment in focus as one of the Fed’s dual mandates, this report has been garnering market attention.
A higher jobless claims number, indicating higher unemployment, would be likely to cause weakness across the US assets (dollar, stocks, and yields), as it feeds into the narrative of a hard landing/broader economic slowdown for the US economy as we come out of the tightening cycle.
A lower jobless claims number, indicating lower unemployment, would be likely to cause strength across the US assets, as it reassures the markets that the US economy may be able to exit the tightening cycle and enter the easing cycle without a recession/broader economic slowdown.
Friday 17th January
08:30 ET
US Housing Starts for December
US Housing Starts refers to the number of new residential construction projects that have begun during a specific period, typically measured monthly. It is a key economic indicator that provides insights into the health of the housing market and the broader economy.
Tracks the construction of new single-family homes, townhouses, and apartment buildings (multi-family units).
Published by the US Census Bureau and the Department of Housing and Urban Development (HUD).
Reflects demand for housing, consumer confidence, and economic activity. A rising trend suggests economic growth, while a decline may indicate slowing activity.
Influences industries like construction, real estate, and manufacturing of building materials.
What to Expect
This release is unlikely to get a market reaction based on historical data, however, higher housing starts generally indicate economic strength, boosting US indices as investors anticipate growth in construction-related sectors, while also supporting the US dollar due to expectations of tighter monetary policy from the Federal Reserve. Simultaneously, bond yields tend to rise as stronger economic activity raises inflation expectations.
Conversely, lower housing starts suggest weakening economic conditions, which can weigh on equity markets, lead to a softer dollar, and cause bond yields to fall as investors anticipate slower growth and potential monetary easing.
09:15 ET
US Industrial Production for December
US Industrial Production measures the total output of the nation’s factories, mines, and utilities, providing a snapshot of the health of the industrial sector. It is released monthly and can serve as an early indicator of economic activity, reflecting shifts in demand, manufacturing trends, and energy consumption.
What to Expect
This release is unlikely to get a market reaction based on historical data, however, higher-than-expected industrial production signals robust economic activity, which tends to lift US indices as it reflects strength in manufacturing and industrial sectors. The US dollar may strengthen modestly due to increased confidence in the economy, attracting foreign investment. Bond yields may rise slightly as stronger production can point to better economic performance and increased demand for capital.
Conversely, weaker industrial production could weigh on US indices as it suggests a slowdown in economic momentum. The US dollar may weaken as economic prospects dim, while bond yields are likely to decline as investors seek the safety of government bonds amidst signs of slower growth.
