Markets will be focused on inflation and employment this week

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Published Date 8/28/2023

No data today but two Treasury auctions, at 11:30 am ET $45B of 2 year notes; at 1 pm $46B of 5 year notes. This week’s key data is on Thursday and Friday; August PCE on Thursday, August employment on Friday.

The speech by J Powell on Friday resonating as economists and traders digest his short comments (15 minutes). The outlook for more rate increases has changed somewhat, maybe the Fed is finished increasing rates this year. The Sept FOMC meeting now expected to be with no increase, that was already thought to be the case; the final meeting this year comes in November. Powell set a high bar for additional interest-rate hikes, economists said Sunday in their commentary at the U.S. central bank’s summer retreat in Jackson Hole. Powell stressed the Fed would “proceed carefully” and balance the risks of tightening too much or too little. Has the done enough, has it over tightened? As usual what the fed will do is dependent on incoming data and Powell stressed that in his comments.

Boston Fed pres. Susan Collins: “I would say I am somewhere in the middle,”… “Are there scenarios,” she asked, “where we hold pretty close to where we are now? Yes, there are.”… “I know it’s frustrating, Many people would like to see a clear, preset path.” “From my perspective, the most important thing right now is patience and looking really holistically at patterns of data — not overreacting to, for example, the most recent retail sales.”

At 9:30 am the DJIA opened +168, NASDAQ +97, S%P +22. 10 year at 9:30 am 4.21% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +19 bps from Friday’s close and +23 bps from 9:30 am Friday.

At 11:30 am 2 year note auction

At 1 pm 5 year note auction

This is employment week, Friday August employment data.

This Week’s Economic Calendar:

• Monday,

No economic news but two Treasury auctions

• Tuesday,

9 am June Case/Shiller home prices (+1.1% from +1.0%, year/year -1.1% from -1.7% in May)

10 am August consumer confidence index (116.5 from 117.0 in July)

July JOLTS job openings (9.559 mil from 9.582 mil)

1 pm $38B 7 year note auction

• Wednesday,

7 am weekly MBA mortgage applications

8:15 am August ADP private jobs (200K from 324K in July)

8:30 am preliminary Q2 GDP (+2.4%, personal consumption expenditures 1.7%)

10 am July pending home sales (-0.4% from +0.3% in June)

• Thursday,

8:30 am weekly jobless claims (238K from 230K the week before)

July personal income and spending (income +0.3%, spending +0.6%)

July PCE (personal consumption expenditures (month/month +0.2% the same as June, year/year +3.3% from +3.0%; core PCE month/month +0.2% same as June, year/year +4.2% from +4.1%)

9:45 am August Chicago purchasing mgrs. index (44.6 from 42.8)

• Friday,

8:30 am August employment data (unemployment 3.5% unch from July, NFP jobs +170K, private jobs 147K, average hourly earnings +0.3% from +0.4%, year/year 4.4% same as July)

9:45 am August PMI manufacturing index (47.0)

10 am August ISM manufacturing index (46.8 from 46.4 in July)

July construction spending (+0.5%)

Source: TBWS

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