WASHINGTON (MaceNews) – Too bad that on the upcoming week’s schedule there’s not another Jay Powell “cross my heart and hope to die” pledge he’s NOT reconsidering policy any time soon, embracing “Op Twist” or otherwise dismantling the Federal Open Market Committee, triggering another jittery freak-out among non-believers.
Failing that, the news watch will have to be content with watching the U.S. 10-year yield oscillate some more, with those scary roller-coaster ups and downs giving all the cable talkers reason to reassure us Powell is “losing control of the bond market,” “in a box,” “behind the curve” and so out of touch with the market.
Meanwhile, the market-based inflation indicators reflect hall-of-mirrors market-based fears of being caught off-sides, and the market-based apprehension that Powell can actually be shoved around permeates the anxiety space. Powell and the data, however, might just keep plodding along as he expects.
What about commodity prices? Steel, aluminum, semiconductors screaming inflation. Is it fundamental base-rate inflation? Transitory spike inflation? How long is “transitory.” At what point does Powell & Co. flinch?
There’s this thing about the commodities market. Demand signals are not ignored. In fact, supply reacts at light speed. Semiconductors? They aren’t gravel. That’s been elevated to be a national security challenge as well as boost to new vehicle prices. Two years from now it’s likely Taiwan may be building fabs in Alabama. And there’s this about interest rates. As recently as the end of 2018 that 10-year was above 3% as was the case in 2009 coming out of the financial crisis.
Which brings us to the data itself, which stubbornly refuses to cooperate with the raging inflation scenario. The CPI for February arrives Wednesday morning. Reminding, the CPI’s inertial driver, the index for shelter, downspeeded to a 1.6% annual change through January from 1.8% through December. Overall the CPI had an annual increase of 1.4% – the consumer inflation rate – through January.
Friday’s Producer Price Index, which has become a very broad-based gauge of both wholesale and retail prices that business pays, did escalate in January with its core showing a record 2.0% increase. Looking under the hood, however, shows a big influence from, what? Portfolio management fees?
Will the inflation indices fall in line and start pumping hard, boosting that 10-year some more? Of will inflation fears continue to be obvious everywhere but in the data?
Elsewhere on the schedule for the week, not much. Monday’s Fed Survey of Consumer Expectations hardly a market mover, but it can contain a lot of interest clues to what’s happening in this first quarter. As noted earlier in the week, the Fed’s Beige Book was a blurry mix of mediocre performances coast to coast, somehow not reinforcing a picture of ebullient growth being depicted in those GDPNow trackers.
And why should it? All the data is distorted by the bounce-back phenomenon, where the impressive gains are so much less impressive when viewed in the context of the pandemic damage that has gone before.
All the week’s data points are below:
Upcoming Economic Data and Fed Events MARCH 8-12 (updated regularly)
Monday, March 8 – 10a ET US Wholesale trade
Monday, March 8 – 11a Federal Reserve March Survey of Consumer Expectations
Tuesday, March 9 – 6a US NFIB small biz optimism index
Wednesday, March 10 – 7a US MBA wkly mortgage applications
Wednesday, March 10 – 8:30a US Feb CPI (Jan +0.3%/Y/Y +1.4%; core unch/+1.4%)
Wednesday, March 10 – 2p US Tsy monthly budget
Thursday, March 11 – 8:30a US Wkly initial claims (prvs +745K)
Thursday, March 11 – US BLS JOLTS hiring/quits
Friday, March 12 – US Feb PPI (Jan +1.3%/Y/Y +1.7%; core +1.2%/+2.0%)
Friday, March 12 – 10a UMich Consumer Sentiment (prvs 76.8)
Separately, from Extract Analytics, the week ahead’s outlook for the SPX:
Contact this reporter: denny@macenews.com.
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