Good morning traders!
The S&P 500 ($SPY) is trading below Friday’s close. Let’s get into it…
This week, investors and traders are gearing up to process a flood of economic indicators, with a particular focus on the Federal Reserve and the future of interest rates. It all starts with the Fed’s preferred inflation metric, the core personal-consumption expenditures (PCE) price index, set to release on Friday. This metric will reveal just how sticky inflation is proving to be. After recent hotter-than-expected consumer and producer prices, the PCE print could confirm that disinflation is slowing down. Economists expect the core PCE to fall to an annual rate of 4.3%, from 4.4% in December. This would imply a slowdown compared with previous monthly declines. However, if the print is hotter, suggesting that the Fed’s battle against inflation has further to run, it could really spook the markets.
Before that, there will be a flurry of retail earnings that will provide a health check on the strength of the consumer. In addition, the latest Fed minutes, which are set to be released on Wednesday, may move the markets. Although they may be old news, investors are still waiting to see if there are any hints on the future path of interest rates.
The Reserve Bank of Australia’s minutes, released on Tuesday, revealed that members considered a 50-basis-points hike at its last meeting before settling on a 25-basis-points hike. It’s not impossible for the Fed to reveal something similar, especially after Cleveland Fed President Loretta Mester said she saw a compelling case for a half-point hike last time around. If the Fed does reveal something similar, it may serve as a wake-up call to the markets that the Fed is far from finished in its mission to tighten monetary policy. All in all, it’s a week full of important economic data, and investors will be keeping a close eye on the markets to see how they react to the information.
Note: Moving averages are reported from the previous trading session and will change during the next trading session.
PMI Composite Flash 9:45am ET
Existing Home Sales 10:00am ET – High Volatility Expected
Fed Speaker Scheduled:
No Fed Speakers Scheduled
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