Last week’s non-farm payrolls report revealed a weaker job market situation in the US than expected, with downward revisions to previous months’ data. This turns up the heat on expectations for imminent rate cuts – a move that markets are now almost certain about. While this may offer a glimmer of hope, it also throws light on a dimmer economic backdrop.
The initial half of this coming week seems relatively tranquil on the news front, save for the US Presidential debate scheduled for Tuesday the 10th – an event of little market consequence but great public interest. However, the latter part of the week will bring important data releases, including the Consumer Price Index (CPI), Producer Price Index (PPI), and other significant updates.
Here are five key components to monitor in the coming week:
Presidential Debate Impact
The upcoming debate might touch on economic matters, potentially affecting market volatility the next day. This economic discourse could establish a backdrop for trading activity until the upcoming elections and expected rate decisions.
CPI Movement
Wednesday’s early news on the Consumer Price Index (CPI) is a highlight of the week. Given the looming rate cuts, a decline in inflation could be viewed favorably. Market reactions to CPI figures falling below expectations could compound with existing rate cut anticipations.
PPI Outlook
Following CPI on Thursday, the Producer Price Index (PPI) will be revealed. Similar to CPI trends, market reactions may vary based on whether the figures come in above or below expectations. Understanding that these indices reflect inflation’s rate of change is crucial.
30-Year Bond Auction Signals
Thursday’s 30-year bond auction post-1pm could serve as an economic litmus test. The auction results, notably the highest rate and Bid-to-Cover ratio, may hint at investor sentiment towards rate cuts. A weak auction might signal doubts about potential cuts, while a robust auction could suggest readiness for a considerable rate adjustment.
Preliminary UoM Sentiment Analysis
Wrapping up the week is the Preliminary University of Michigan Sentiment report on Friday. While this release may not spark major market movements, it provides a glimpse into consumer sentiment and economic outlook from a modest respondent pool.
Wishing you a fruitful trading week ahead, and remember to stay informed with our daily options article.
On the date of publication, Gavin McMaster did not hold any positions in the securities mentioned. All information provided is for informational purposes only. Refer to the Barchart Disclosure Policy for further details.
The opinions expressed in this article are solely those of the author and may not necessarily align with those of Nasdaq, Inc.
