Markets will be focused on the Friday PCE report

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Published Date 9/23/2024

Two releases today. The Chicago Fed National Activity at 8:30 am ET and PMI Flash report. The Index increased to +0.12 in August from a revised -0.42 in July and better than market estimates of -0.20. It follows two consecutive months of decreases. Production-related indicators contributed +0.21 to the index in August, up from –0.42 in July. Also, employment-related indicators contributed -0.01 in August, up from -0.09 in July. Sales, orders, and inventories category's contribution was –0.04 in August, down from +0.07 in July. The personal consumption and housing category's contribution was -0.04 in August, down from +0.02 in July. The index's three-month moving average decreased to –0.17 in August from –0.13 in July.

The keys this week, inflation data on Friday and Jerome Powell speaking on Thursday. There are a number of Fed officials speaking this week, this morning already Atlanta Fed’s Bostic; “We have made sufficient progress on inflation, and the labor market has exhibited enough cooling, that the time has come to shift the direction of monetary policy to better reflect the more balanced risks to our price stability and maximum employment mandates that have emerged over the course of the year,” he said it is time to normalize rates. He pointed out that over the last year 70% of the 2.5% in core prices was a result of increases in housing and the service sector. “Clearly the red-hot job growth coming out of the pandemic is cooling,” Bostic said. “That said, the labor market is weakening but is not weak, slowing but not slow.”

Later today Chicago Fed President Goolsbee and Neel Kashkari Minneapolis Fed. This week there are more Fed officials coming later in the week. The Fed is on the path of lowering rates, a little concern about the employment sector as strong as it has been lately but the consensus at the Fed is employment is beginning to moderate although still resilient.

At 9:30 am the DJIA opened +36, NASDAQ +51, S&P +11. 10 year 3.76% +2 bps. FNMA 5.5 30 year coupon at 9:30 am -9 bps from Friday’s close and -15 bps from 9:30 am Friday.

At 9:45 am the FLASH September PMI data; the composite expected at 53.0 increased to 54.4 and down from 54.4 in August, manufacturing index 48.9 with forecasts of 47.0 and 48.0 in August, the service sector thought to be +55.2 increased to 55.4 and down from 55.7. Manufacturing continues in contraction.

This Week’s Economic Calendar:

Monday,

Not a lot of data but three Fed officials speaking

Tuesday,

9 AM July Case/Shiller home price index

10 am September consumer confidence index (103.0 from 103.3)

1 pm $69B 2 year note auction

Wednesday,

7 am weekly MBS mortgage applications

10 am August new home sales (700K from 739K)

1 PM $70B 5 year note auction

Thursday,

8:30 am weekly jobless claims (224K from 219K)

August durable goods orders -2.7% from +9.9%, ex transportation 0.0%, core capital goods (0.0% from -0.1%)

Final Q2 GDP (+3.0% unch from the preliminary report)

9:20 am Jerome Powell at the 2024 U.S. Treasury Market Conference, Federal Reserve Bank of New York, New York, N.Y.

10 am August pending home sales (+3.1% from -5.5%)

1 pm $44B 7 year note auction

Friday,

8:30 am August PCE (month/month +0.1% from +0.2%, year/year +2.3% from 2.5%; core month/month +0.2% from +0.2%, year/year 2.7% from 2.6%)

August personal income +0.4%, personal spending +0.3% from +0.5%

10 am Final University of Michigan consumer sentiment index (69.0 unch from mid-month)

Source: TBWS

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