The stock and bond market are attempting to price in the “right” amount of Federal Reserve interest Rate cuts over the next several months.
Powell and company next rate announcement will be on September 18th.
Last week we heard both the Producer Price Index (PPI) and the Consumer Price Index (CPI) reported as desired. The PPI increased .1% and the CPI .2%.
Between now and September 18th, the Fed and investors will hear several key important data points the Fed will be interpreting.
- August 30th, Personal Consumption Expenditures (PCE)
- September 6, jobs report for August
- September 11, CPI
- September 12, PPI
In addition, this coming Friday, is the annual Jackson Hole Fed speech. Many expect Chair Powell to provide more insight into his thinking.
The Fed challenge, to thread the needle lowering rates without bringing back inflation, doing so in time, ensuring our economy does not slow into a recession.
My desire, is for the Fed to lower to “normalize” rates opposed to lowering rates because the economy is slowing too quickly. A couple weeks ago, the jobs report and manufacturing reports made everyone aware of how quickly things can change.
We have a lot of moving parts to watch however the consumer remains strong and borrowing costs are coming down which is definitely a positive.
Stocks Recover
Stocks gained significant ground last week on the heels of positive inflation reports and a strong Retail sales number.
Last week’s retail sales number jumped just under 1%, led by Automobile sales. Automobile incentives were higher than in the last 3 years, a relief from a couple years back, when only paying MSRP was a dream.
For the week the Dow raced higher by 2.98%, the S&P 500 3.97%, the Nasdaq 5.28% and the Russell 2000 2.96%.
Over the pond, foreign stocks followed the lead, increasing 3.83% with emerging markets higher by 3.17%.
The yield on the 10-year US Treasury finished the week @ 3.83%.
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