This week saw relatively light activity, primarily focused on discussions with the Federal Reserve Board. The only truly notable report released was the Consumer Sentiment Report, which happily reported that sentiment had risen for the month of October. Meanwhile, the Federal Reserve’s latest Beige Book survey noted a slight decline in manufacturing activity.
Jobless Claims
The release of last week’s inflation data has left this week with very few significant data updates. The most important information will come from various Federal Reserve members speaking on different topics. They have consistently emphasized that they will closely monitor the data to decide whether further rate cuts are needed in their upcoming rate decision meeting. Much of the market is optimistic that rate cuts will continue. Additionally, several smaller retail sales data releases are expected soon, which will provide insight into the current strength of the economy.
The CPI and PPI reports delivered their data, showing inflation figures slightly below expectations. However, the positive impact of these reports was tempered by hawkish comments from Federal Reserve members during recent meetings. Despite this, the overall outlook remains optimistic, as further rate cuts are anticipated. Lending partners have also responded positively, significantly lowering their lending rates over the past month.
Last week was a fairly light week, with the non-farm payroll data being the most significant release. The data showed that payrolls are growing at a faster rate than historical trends suggest, which could indicate that inflation is still above the Federal Reserve’s target. In contrast, the upcoming week has a busy schedule, with many important economic releases lined up back to back.
With the release of the PCE Index data, we are seeing the trend hold as inflation continues to slow down. This gives the Federal Reserve room to continue its rate cuts in the future. Following the positive news for inflation data, the GDP has also seen a larger-than-expected growth of 3% this quarter. The only data running against the tide is the Consumer Confidence reports, which reported to show that consumers are at their most anxious since 2021. We should expect a greater impact on the lending and broader markets ahead of the elections.
The long-awaited week has come and within expectations, the Federal Reserve has decided to reduce interest rates for central banks by 50 basis points. This is the bigger of the two options for a rate cut, with the lesser being 25 basis points. The impact of this cannot be understated as this gives an official nod that the economy is in a good spot and inflation is under control, according to the Federal Reserve’s outlook on the data. The only black mark on the week of releases is the U.S. Leading Economic Indicators showing the economy has been in a slower trend for the past 6 months. The Federal Reserve, despite the rate cut, has continued to remain hard in its stance about not cutting rates too quickly. This will likely depend on future data.
The week for the Federal Reserve’s rate decision has finally come. This is the week everyone has been waiting which will decide whether we will see any rate cuts this year. There has been a lot of speculation that this will be the first rate cut and likely more in the future. With the Federal Reserve giving hints the data has been on track, the outcome of one seems very likely. With the previous week’s CPI and PPI statistics coming in, which both were slightly warmer than expected, the data still largely shows that inflation has been kept under control. This may affect the decision, but ultimately throughout the year, the data has been consistent with few surprises. The week rounded out with the Consumer Sentiment data reports showing favorable results, indicating that the current state of the economy is in a neutral position in the eyes of the average consumer.
This week, the most important release of the year regarding inflation data will occur. Once again the CPI and PPI take the front stage clearing the way for rate cuts made by the Federal Reserves. Based on several indicators, there is strong confidence that if the upcoming inflation data meets expectations, we could see interest rate cuts before the year ends. In addition to the inflation data, the Consumer Credit reports will be released early this week. Both lending partners and the broader market have high expectations for these reports.
With the PCE Index data coming in as exactly as expected and the Federal Reserve signaling a strong potential for a rate cut, there is much optimism we will be seeing a rate cut this year if not the start of the next year. Among the PCE inflation data reports were the GDP initial figures, which projected the economy has grown faster than expected. Additionally, Personal Income data has also grown faster than expected. Both are very positive signs with inflation finally showing signs of flagging after in part due to the Federal Reserve’s aggressive monetary policy.
Last week’s light release schedule suggests that the Federal Reserve may be planning to cut rates this year, as most inflation data align with this expectation. This week, the only notable releases are the minor FOMC Minutes and the U.S. leading economic indicator index. While these indicators came in slightly worse than expected, the results are not significant enough to impact the upcoming rate decision.