This figure could change the count for the Fed, which is guaranteed to raise rates again at its next policy meeting on Sept. 21.
But if inflation data continues to suggest that “price stability” could finally be close to reality, would another big rate hike be less likely? CPI) figures will be released on Tuesday morning, while Producer Price Index (PPI) figures will be released on Wednesday.
Economists now expect consumer prices to fall slightly in August from July, with prices up 8.1% over the past 12 months. Of course, 8.1% is still incredibly high by historical standards, but it would be a notable slowdown from June’s 9.1% y/y jump.
“Inflation has probably peaked. Food and energy prices are falling. There is room to fall further,” said Joe Kalish, chief global macro strategist at Ned Davis Research. .
Investors seem reluctant to accept the possibility that the Fed will raise rates again by 75 basis points in the coming weeks, regardless of what the August inflation data show.
But traders hope September’s rate hike will be the last of such magnitude. Assuming the Federal Reserve raises interest rates by three-quarters of a percentage point on September 21st, interest rates will be in the target range of 3% to 3.25%.
Look at Federal Funds futures on the CME in November. As of noon on Friday, investors had priced in his odds of a half-point rate hike at his November 2 Fed meeting at 70%.
But there was only a 10% chance of four consecutive gains of 75 basis points. This may be one of the reasons why the stock has rebounded so much in September following the fall in August.
Slowdown in inflation and consumer spending to continue
Wall Street is clearly betting that inflation trends will continue to head in the right direction. Economists also expect producer prices, the cost of goods at wholesale prices, to fall slightly in August. Following a decline of 0.5% from June to July, he forecast a decline of 0.1% from July to August.
Producer prices rose 9.8% year-on-year in July, down from a June high of 11.3%. A further slowdown could be welcomed by markets, the Fed, and consumers.
That leads to retail sales. Consumer spending figures for August are due to be released on Thursday morning. The government last month reported that retail sales in July rose 10.3% year-on-year. It will be interesting to see if that sales rate picked up in his August or slowed down.
And that’s the point. Investors need to pay more attention to inflation data, no matter what Powell or other Fed members say. Rate hike odds are always in flux as the Fed continues to rely on data.
“There must be a compelling downtrend in inflation.
Big tech at your fingertips
Shares of both companies have fallen this year, along with the rest of the tech sector and the broader market. Oracle is down nearly 15% and Adobe is down more than 30%.
However, analysts expect strong sales growth for both companies. Adobe is up nearly 15% from a year ago and Oracle is up nearly 20%.
One investment strategist said big tech companies such as Oracle and Adobe make sense for investors.
“We have a much more mature and established big tech,” said Suzanne Hutchins, head of real return strategy and senior portfolio manager at Newton Investment Management.
“Both companies generate more than 40% of their sales outside the United States,” Morgan said in the report.
Monday: Chinese market closed.Earnings from Oracle
Wednesday: US PPI
Thursday: US retail sales; US weekly unemployment claims; Meeting between Vladimir Putin of Russia and Xi Jinping of China.Earnings from Adobe
Friday: Consumer sentiment in Michigan, USA.China retail sales, unemployment and other economic data