Markets start a new trading week in the pre-market up moderately once again, following a fairly robust week of trading that saw the S&P 500 close out at a new record all-time high. Ahead of today’s opening bell, the Nasdaq is +55 points, the Dow is +20 and the S&P is +8 points at this hour.
This promises to be an eventful week on the economic data front, though we start slowly today with no major items on the docket. Later this week, starting tomorrow, we’ll get new prints on Producer Price Index (PPI), Retail Sales, Import/Export Prices, Housing Starts/Building Permits and Industrial Production/Capacity Utilization, all for November. For this month, we’ll get fresh reads on Empire State and Philly Fed surveys, as well as PMI Manufacturing and Services. And, of course, weekly Initial and Continuing Jobless Claims.
The biggest event from our current vista will be the latest meeting of the Federal Open Market Committee (FOMC), which convenes tomorrow for two days, followed by a statement on monetary policy and a presser from Fed Chair Jay Powell. Prevailing wisdom at this moment appears to be the Fed has gotten itself behind the eight-ball in terms of reacting to non-transitory inflation, which some economists — and even some voting Fed presidents — had been calling for back at the end of summer.
The previous FOMC meeting, from the first week of November, got the ball rolling on the taper of asset purchases in treasuries and mortgage-backed securities. From the $120 billion per month, the Fed decided then to dial back the purchases by $15 billion per month. In testimony later in the month, Powell spoke on the idea that the Fed would need to taper faster, in order to bring about interest rate hikes to absorb inflation. Should we see new policy emerge Wednesday that $30 billion in taper increases is the new method, that would bring us to the end of winter/start of spring for when the asset purchases will have been completed.
The question then, obviously, is when interest rates can be expected to rise, and how quickly. Currently, economists and strategists are in the 2-3 quarter-point rate hikes in 2022, which by this time next year would bring us to a range of 0.75%-1.00%. Although inflation trends are coming in hot across the board — with more potential articulation with this week’s econ data — raising rates too quickly, as the Fed already knows, would be damaging to the overall economy.
It’s therefore a delicate balance that must be expertly performed, and Powell has already been established as Fed Chair for another term. This should take some of the political heat off any decision-making. That said, economists today are quick to point out potential flaws in decision-making done to this point. This is an important time for the U.S. economy, with plenty of moving pieces. At this moment, the stock market feels assured that things will work out.
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Markets Wait for A Series of Major Economic Data
Markets start a new trading week in the pre-market up moderately once again, following a fairly robust week of trading that saw the S&P 500 close out at a new record all-time high. Ahead of today’s opening bell, the Nasdaq is +55 points, the Dow is +20 and the S&P is +8 points at this hour.
This promises to be an eventful week on the economic data front, though we start slowly today with no major items on the docket. Later this week, starting tomorrow, we’ll get new prints on Producer Price Index (PPI), Retail Sales, Import/Export Prices, Housing Starts/Building Permits and Industrial Production/Capacity Utilization, all for November. For this month, we’ll get fresh reads on Empire State and Philly Fed surveys, as well as PMI Manufacturing and Services. And, of course, weekly Initial and Continuing Jobless Claims.
The biggest event from our current vista will be the latest meeting of the Federal Open Market Committee (FOMC), which convenes tomorrow for two days, followed by a statement on monetary policy and a presser from Fed Chair Jay Powell. Prevailing wisdom at this moment appears to be the Fed has gotten itself behind the eight-ball in terms of reacting to non-transitory inflation, which some economists — and even some voting Fed presidents — had been calling for back at the end of summer.
The previous FOMC meeting, from the first week of November, got the ball rolling on the taper of asset purchases in treasuries and mortgage-backed securities. From the $120 billion per month, the Fed decided then to dial back the purchases by $15 billion per month. In testimony later in the month, Powell spoke on the idea that the Fed would need to taper faster, in order to bring about interest rate hikes to absorb inflation. Should we see new policy emerge Wednesday that $30 billion in taper increases is the new method, that would bring us to the end of winter/start of spring for when the asset purchases will have been completed.
The question then, obviously, is when interest rates can be expected to rise, and how quickly. Currently, economists and strategists are in the 2-3 quarter-point rate hikes in 2022, which by this time next year would bring us to a range of 0.75%-1.00%. Although inflation trends are coming in hot across the board — with more potential articulation with this week’s econ data — raising rates too quickly, as the Fed already knows, would be damaging to the overall economy.
It’s therefore a delicate balance that must be expertly performed, and Powell has already been established as Fed Chair for another term. This should take some of the political heat off any decision-making. That said, economists today are quick to point out potential flaws in decision-making done to this point. This is an important time for the U.S. economy, with plenty of moving pieces. At this moment, the stock market feels assured that things will work out.