Week Ahead: Economic Indicators (US)
For the February 17th week, here is a list of all of the major economic indicators being released during the US Session
Tuesday 18h February
08:30 ET
Canadian CPI for January
The 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.
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 Canadian stocks, and strength in the Canadian dollar and government bond yields, as this would cause markets to pull back further on bets for further 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 target.
If CPI came in lower than expected, we would expect strength in Canadian stocks, and weakness in the Canadian dollar and government bond yields, as this would indicate that inflation is continuing to come down to the target, which could increase the likelihood that the BoC can move forward with further interest rate cuts.
Wednesday 19th February
08:30 ET
US Housing Starts for January
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.
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.
14:00 ET
FOMC Meeting Minutes
The Federal Open Market Committee Meeting Minutes are detailed records of the discussions held during the Federal Reserve’s policy-setting meetings.
Released three weeks after each FOMC meeting, these minutes provide insight into the committee’s views on economic conditions, inflation, employment, and interest rates.
Investors and analysts study the minutes closely for clues about the Fed’s future monetary policy decisions, as they reveal members’ opinions and any potential shifts in policy stance.
What to Expect
If the comments from the meeting minutes underline a more hawkish view from Fed officials (underlining an unwillingness to cut rates, and/or reduced confidence in inflation’s sustainable return to target), we would expect to see weakness in US stocks, and strength in the US dollar and bond yields, as traders reduce their bets on Rate Cuts from the Fed.
If the comments are more dovish (underlining a willingness to continue with interest rate reductions, and/or satisfaction with employment and inflation levels), we would expect to see strength in US stocks and weakness in the dollar and bond yields, as traders would bolster bets on further Fed rate cuts.
Thursday 20th February
08:30 ET
US Weekly Initial & Continued Jobless Claims
US Weekly Initial & Continued Jobless Claims measure the number of people filing for unemployment benefits.
Initial Jobless Claims track new filings for unemployment insurance, providing a real-time indicator of labour market conditions.
Continued Jobless Claims reflect the number of individuals still receiving unemployment benefits after their initial claim, offering insight into longer-term joblessness.
Both data points are released weekly by the Department of Labor and are key indicators of economic health, influencing market sentiment and Federal Reserve policy decisions.
What to Expect
The jobs market is part of the Fed’s dual mandate, and the Fed are on the look out for any meaningful weakening in the jobs market to potentially prompt a response with US interest rate cuts.
This means that if the Jobless Claims numbers come out meaningfully higher than expected (indicating higher unemployment) this could lead to weakness in US stocks, and strength in the dollar and government bond yields, as traders may take a weaker labor market as a sign that the Fed may intervene with rate cuts.
If jobless claims come in lower (indicating a lower unemployment) then this will reinforce the past data from the US which shows a resilient labor market, and would likely cause traders to reduce bets on Fed rate cuts, which could cause weakness in US stocks, and strength in the dollar and government bond yields.
11:00 ET
US 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.
Friday 21st February
09:45 ET
US S&P Manufacturing & Services PMI February Prelim
The US S&P PMI’s measures the performance and activity level of the US services and manufacturing sector.
It is based on a survey of purchasing managers and tracks variables like new orders, employment, business activity, and input prices.
As a diffusion index, a PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.
These index’s is considered a timely indicator of economic health, as they both account for significant portions of US GDP.
What to Expect
If the PMI’s comes in higher than expected, that indicates strong demand, which points to a resilient consumer, and decreased fears of an economic slowdown.
This would be likely to cause strength across the US assets (dollar, yields, and US stocks), whereas if it comes in weaker than expected, we would expect weakness across US stocks.
10:00 ET
University of Michigan Sentiment Survey
What is it?
Conducted by the University of Michigan, the survey gauges consumers’ attitudes and expectations regarding personal finances, business conditions, and overall economic prospects.
The survey results are presented as an index, with higher values indicating greater consumer confidence.
In this report, respondents can also give their forecasts for 1-year and 5-10-year ahead inflation expectations, which the markets sometimes pay attention to.
What to expect?
When it comes to the headline sentiment read, a higher consumer sentiment number at the moment would be seen as bullish for US stocks and the dollar, as it indicates that the consumer is feeling good about the economic environment, which reduces the chances for a hard landing coming out of this Fed tightening cycle.
When it comes to inflation expectations, the markets will want to see these coming in lower than expected, which would increase confidence in the Fed’s ability to reduce rates and start to stimulate the areas of the economy that have shown weakness.
This would likely cause strength in US stocks.
US Existing Home Sales for January
US Existing Home Sales is a monthly report released by the National Association of Realtors (NAR) that measures the number of previously owned homes sold during the month.
This includes single-family homes, townhouses, condominiums, and co-ops.
The report provides insights into the health of the housing market, consumer confidence, and overall economic conditions.
An increase in existing home sales indicates strong demand and economic growth, while a decrease may signal a slowdown in the housing market or broader economy. It is a key indicator of real estate trends in the US economy.
What to Expect
This release is unlikely to cause a market reaction based on the prior months data.
Having said that, higher-than-expected home sales would underline strong demand for homes from US consumers, which would help alleviate fears of an economic slowdown.
This would be likely to cause strength across US asset classes (stocks, bonds, and the dollar)
If it comes out lower than expected, the opposite could be true.
