CPI inflation, FOMC policy meeting, November retail sales
U.S. equity markets fell this week on mixed economic data, as traders balanced concerns about a potential recession in the U.S. with more aggressive tightening by the Federal Reserve. For the week, the Dow fell 2.8%, the S&P 500 shed 3.4%, and the Nasdaq contracted 4%. Treasury yields fell early in the week before rebounding higher, with the yield on the 10-year note hitting a low of 3.4% on Wednesday—its lowest level since September. Crude oil prices fell to new year-to-date lows, as a resurgence of COVID-19 cases in China and a worsening global growth outlook weighed on demand. The price of West Texas Intermediate (WTI) crude fell over 10% this week to $71 per barrel.
As the ripple effects of crypto exchange FTX’s collapse continue to spread, the SEC issued new guidance requiring companies that issue securities to disclose their crypto exposure to investors. Former FTX founder and CEO Sam Bankman-Fried is set to testify before the House Financial Services Committee on Tuesday.
The spotlight next week will be on the latest inflation figures due Tuesday and the Fed’s two-day policy meeting, with central bankers expected to announce an interest rate decision and near-term projections for the U.S. economy on Wednesday. On Thursday, the U.S. Census Bureau will also report on November retail sales, indicating whether consumer spending remained solid last month. On Friday, S&P Global will release the flash estimate for its Composite Purchasing Managers’ Index (PMI) for December.
KEY TAKEAWAYS
The Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) for November on Tuesday, providing the latest read on consumer inflation.
The Federal Open Market Committee (FOMC) will conduct its two-day monetary policy meeting starting on Tuesday, concluding with an interest rate decision on Wednesday
On Thursday, the U.S. Census Bureau will report on November retail sales, indicating whether consumer spending remained strong last month
On Friday, S&P Global will release the flash estimate for its Composite Purchasing Managers’ Index (PMI) for December.
Consumer Inflation Update
The Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) for November on Tuesday, offering the latest read on consumer inflation. Headline prices are projected to have risen 0.3% last month, decelerating slightly from a 0.4% gain in October. Year-over-year, prices likely rose 7.6%, down slightly from 7.7% in October and compared to a peak of 9.1% in June. Core inflation, which excludes food and energy costs, likely decelerated to a 6.2% annual rate last month, down from 6.3% in October and compared to a 40-year high of 6.6% in September.
FOMC's December Policy Meeting
Next Wednesday, the Federal Open Market Committee (FOMC), the interest rate-setting committee of the U.S. Federal Reserve, will conclude its December meeting on monetary policy. Fed officials are widely expected to hike interest rates by an additional 50 basis points (bps) in their ongoing effort to cool high inflation, setting the benchmark federal funds rate in a range of 4.25% to 4.5%. The Fed has raised its benchmark rate by a cumulative 375 bps so far this year, in the fastest tightening cycle in over four decades.
November Retail Sales
The U.S. Census Bureau will report on November retail sales, a key indicator of consumer spending, on Thursday. Retail sales are projected to have declined 0.1% in November, following an unexpectedly strong 1.3% gain in October that marked the highest monthly gain since February. Compared to the same period a year ago, sales likely rose 7.9%. Retail sales have remained robust this year despite higher prices that have diminished consumers’ purchasing power. The personal savings rate recently fell to 2.3%, the lowest since 2005, as consumers are spending a greater percentage of their disposable income to finance their purchases.