Making Sense: In Brief
The week ahead for markets and the economy
Monday, July 15, 2024
Blake: Last week, markets significantly repriced the fixed-income outlook as CPI inflation surprised materially to the downside and Fed Chair Powell emphasized the two-sided risks facing the economy in his congressional testimony.
After repeated surprises to the upside earlier this year, inflation data came in much softer than expected last week. For months, Fed officials have stated they need to see additional evidence that inflation is cooling before they begin to lower interest rates. And we believe the last few months of data have now paved the way for those cuts to begin soon.
Earlier in the week, Fed Chair Powell told Congress that he and his fellow policymakers are increasingly attentive to the softening labor market. Economic conditions are still mostly quite strong, but recently, the direction of travel has been toward cooling.
Turning to the week ahead, even though the first batch of June inflation data are now in the rearview mirror, attention will likely still remain on Fed policy and interest rates as policymakers, including Chair Powell, give several interviews, speeches and remarks this week. Investors will be watching for signs that the Fed may be reassessing their views on inflation and their plans to lower rates.
We'll also get an updated snapshot of consumer spending with the release of June retail sales data on Tuesday. Consumer data have been mixed in recent months, and investors are on alert for any signs of slowdown.
On Wednesday, fresh housing starts data will be released. New housing starts have been depressed the last few months and the consensus forecast is now looking for only modest improvement this month.
Last, but certainly not least, second quarter earnings season will ramp up further this week.
So items to watch: One, remarks from Fed policymakers, including Chair Powell. Two, retail sales data. Three, housing starts. And four, Q2 earnings season.
Authors
Brent Ciliano CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Brent.Ciliano@FirstCitizens.com | 919-716-2650
Phillip Neuhart | SVP, Director of Market & Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Phillip.Neuhart@FirstCitizens.com | 919-716-2403
Blake Taylor | VP, Market & Economic Research Analyst
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Blake.Taylor@FirstCitizens.com | 919-716-7964
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