Now Back to the Economy
Now that geopolitical events seem to be moderating the markets will get back to focusing on the economic data, manufacturing reports, the FOMC, business indicators and inflation levels for future monetary policy direction regarding the economy and interest rates.
Week of August 11-15th
This week is dominated by the bond market as the Treasury is auctioning off 3-year notes on Tuesday, 10-year notes on Wednesday, and 30-year bonds on Thursday. We also have the Treasury budget on Tuesday to look forward to, but the big driver should be the 10- and 30-year bond auctions, what kind of participation will these bond auctions get with yields at essentially 2014 lows heading into Jackson Hole next week?
The inflation watchers will have PPI on Friday for signs of inflation. The week is rounded out with Retail Sales on Wednesday, Import and Export Prices on Thursday, and Empire Manufacturing & Industrial Production on Friday. Also watch for the GDP numbers coming out of Europe on Thursday, we know they are going to be dismal, just how bad is the real question? Ergo, there is enough economic data starting Tuesday for traders to really sink their teeth into regarding the direction of the economy.
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Week of August 18-22nd
The following week starts Monday August 18th with the Housing Market Index; we have the CPI Inflation Report on Tuesday along with Housing Starts. Wednesday the 20th will be dominated by the FOMC Minutes which will be interesting as the hawks are starting to bring the Doves around regarding the economy and job market being ahead of the Fed`s projections, and the need to move earlier on raising interest rates. We will see if the minutes show any indication of this hawkish sentiment swing within the committee participants!
This will be even more interesting because the focus for the week will be on Jackson Hole and any news coming out of this three-day meeting regarding a change in monetary policy, watch for the Friday August 22nd speech by Janet Yellen for a possible market signal regarding a more hawkish tone for markets. Thursday August 21st has Jobless Claims, PMI Flash Manufacturing, the Philadelphia Fed Survey and Existing Home Sales with a 5-year TIPS Auction.
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Week of August 25-29th
The following week gets started on Monday August 25th with the PMI Services Flash, New Home Sales and the Dallas Fed Manufacturing Survey. On Tuesday August 26th we get Durable Goods Orders, the Richmond Fed Manufacturing Index and the 2-year Note Auction. On Wednesday we get the 5-Year Note Auction with the second look at 2nd quarter GDP on Thursday August 28th. Believe it or not we could actually get a revised up number on second quarter GDP from the already robust 4% reading! On Thursday we also have Jobless Claims which have been trending down; the real question is how much lower can they go? We also have Pending Home Sales and the 7-Year Note Auction on Thursday and we close out the week with Personal Income and Outlays on Friday.
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Rock & Roll September
This economic data closes out the month of August and brings in the September data after the Labor Day Holiday with the Employment Report on Friday September 5th. Look for things to really Rock & Roll in September as many traders get back from vacation, and we have the all-important quarterly FOMC Meeting Announcement, FOMC Forecasts, and Chair Press Conference on Wednesday September 17th.
This is probably the most important Fed Meeting of the year so far, and the potential for real fireworks at this meeting is definitely off the charts as QE officially ends in October, and if a market signal on Rates hasn`t been sent by this date, it probably gets sent right here to financial markets!