This week’s biggest data reports in the US are July’s Consumer Price Index (CPI), retail sales, Producer Price Index (PPI), and industrial production. Weaker-than-expected data could fuel the ongoing disinflation or recession trade, while stronger reports might push yields higher and provide a lift to equities.
Consensus projections indicated that core CPI is anticipated to rise by 0.2% month-on-month (MoM), with the year-on-year (YoY) rate expected to dip slightly from 3.3% to 3.2%. Retail sales are projected to show modest positive MoM growth, continuing the trend of low single-digit YoY increases – indicating slow but not recessionary growth. The consensus expects PPI to rise by 0.1% MoM, while industrial production is also forecasted to see a 0.1% MoM increase.
As traders evaluate the economic and monetary policy outlook, they await these key data releases, which could provide fresh insights into the likelihood of a soft landing for the US economy. Last week, the S&P 500 closed with a 0.05% decline, marking its fourth consecutive week of losses, while the Nasdaq fell 0.2% and the Dow Jones dropped by 0.6%.
The Federal Reserve is expected to cut rates at its upcoming policy meeting on September 17-18, with traders weighing the odds of a 25 or 50-basis point reduction.
Other releases this week include Michigan consumer confidence for August, along with July’s housing starts and building permits.
Earnings season continues, though trends have weakened, particularly as more small-cap and cyclical sectors report. Our research partner anticipates that retail earnings will reflect trends of sluggish spending, deeper price discounting, and trading down, especially among retailers with a higher concentration of lower-income consumers.
Notable earnings reports this week include Home Depot Inc (NYSE:HD), Walmart Inc (NYSE:WMT), Cisco Systems Inc (NASDAQ:CSCO), Nu Holdings Ltd (NYSE:NU), Sea Ltd (NYSE:SE), JD.com Inc (NASDAQ:JD), and Grab Holdings Ltd (NASDAQ:GRAB).
Cisco Systems is reportedly preparing for a second round of layoffs this year, potentially affecting up to 4,000 employees.
In closing, with consensus projections pointing to modest growth in key indicators, the potential for volatility remains high as markets react to any surprises. Whether the data aligns with expectations or diverges, the insights gained this week could set the tone for the months ahead, offering further clarity on the path of inflation, consumer behaviour, and economic resilience.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
