Week Ahead: Economic Indicators (US)
Hey, Traders!
For the September 9th week, here is a list of all of the major economic indicators being released during the US Session, with a brief synopsis of what they represent and what to possibly expect from the markets in reaction.
Wednesday 11th September
08:30 ET
US CPI for August
The US Consumer Price Index is a monthly measure released by the Bureau of Labor Statistics (BLS) that tracks changes in the average price level of a basket of goods and services purchased by urban consumers in the United States.
It is a key indicator of inflation, reflecting the cost of living and the purchasing power of the dollar.
The CPI includes categories like food, energy, housing, clothing, transportation, and medical care.
A rising CPI indicates increasing inflation, meaning consumers are paying more for goods and services, while a falling CPI suggests deflation.
What to Expect
It is worth noting that, since FOMC officials have noted more of a focus on the jobs side of their dual mandate, inflation numbers have not seen reactions as big as they have done in the recent past.
If CPI inflation comes in higher than expected, this could cause a reduction in pricing for interest rate cuts this year, as policy may need to stay more restrictive for longer in order to make sure it comes down to target.
This repricing could cause weakness in US stocks, and strength in the dollar and bond yields, as higher for longer rates negatively affect equities, but supply more interest paid on government bonds.
If CPI inflation comes in lower than expected, this could cause markets to solidify/increase bets on rate cuts this year, which could cause strength in US stocks and weakness in the dollar and bond yields.
10:30 ET
US Weekly EIA Crude Oil Inventories
The US Weekly EIA Crude Oil Inventories report, released by the Energy Information Administration every Wednesday, provides data on the current amount of crude oil held in storage across the United States.
This report helps gauge supply and demand dynamics in the oil market and can influence oil prices and market sentiment.
What to Expect
An increase in inventories suggests lower demand or higher supply, creating a potential downside in oil prices, while a decrease indicates higher demand or lower supply, causing a possible strengthening in oil prices.
Thursday 12th September
08:30 ET
US PPI for August
The US Producer Price Index measures the average change over time in the selling prices received by domestic producers for their output.
Released monthly by the Bureau of Labor Statistics (BLS), the PPI is a key indicator of inflation at the wholesale level, as it tracks price changes before they reach the consumer.
It covers a wide range of goods and services, including raw materials, intermediate goods, and finished products.
An increase in the PPI suggests rising production costs, which can lead to higher consumer prices (CPI), while a decrease indicates falling production costs.
What to Expect
It is worth noting that, since FOMC officials have noted more of a focus on the jobs side of their dual mandate, inflation numbers have not seen reactions as big as they have done in the recent past.
If PPI inflation comes in higher than expected, this could cause a reduction in pricing for interest rate cuts this year, as policy may need to stay more restrictive for longer in order to make sure it comes down to target.
This repricing could cause weakness in US stocks, and strength in the dollar and bond yields, as higher for longer rates negatively affect equities, but supply more interest paid on government bonds.
If PPI inflation comes in lower than expected, this could cause markets to solidify/increase bets on rate cuts this year, which could cause strength in US stocks and weakness in the dollar and bond yields.
US Weekly Initial & Continued Jobless Claims
Initial Jobless Claims measure the number of people filing for unemployment benefits for the first time in a given week. This provides an early indication of the health of the labor market and can signal changes in economic conditions.
Continued Jobless Claims represent the number of people who continue to receive unemployment benefits after their initial claim, reflecting longer-term unemployment trends.
A rising number of claims may indicate a weakening labor market, while a decline suggests improving conditions. These metrics are important for assessing the overall state of the economy and guiding monetary policy decisions.
What to Expect
With employment in focus at the moment, this report has been garnering a lot of market attention over the last 4 weeks.
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 13th September
10:00 ET
University of Michigan Sentiment Survey September Prelim
The University of Michigan Sentiment Survey is a monthly survey that measures consumer confidence in the United States.
It assesses consumers’ attitudes about current economic conditions and their expectations for the future, covering areas like personal finances, business conditions, and overall economic outlook.
The survey’s results are used to gauge consumer sentiment, which can influence consumer spending, a key driver of the economy.
A higher sentiment indicates optimism about the economy, while a lower sentiment reflects concerns or pessimism.
The survey also includes the results for 1-year and 5-10-year ahead inflation expectations.
What to Expect
This release has not seen a meaningful market reaction in the last few months.
Markets tend to pay more attention to the inflation expectations than the headline sentiment number. However, with the focus shifting to whether the US economy will be entering a recession or not, this might change.
A higher consumer sentiment indicates a resilient consumer, which would reduce the likelihood of a recession and could cause strength across the US assets (dollar, stocks, and yields)
Whereas a lower sentiment number could indicate that the consumer is not faring well to tighter financial conditions, and could increase the chances of a hard landing/recession, which would be likely to cause weakness across the US assets.
