Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.
Both my sons were out of school for spring break last week, and while we did not go out of town, we did something local almost every day. The highlight was undoubtedly visiting an escape room. For those who have never tried one, I highly recommend it. We had an hour to figure out the clues left around the room to unlock various chests, cupboards and secret enclaves. You can ask for hints, but of course it’s more fun and satisfying to figure it out independently. It was a great family exercise as everyone can help and add value.
Regarding the economy, the question on investors’ minds is: can the Federal Reserve continue to mitigate inflation while escaping a deep recession? The answer is unknowable at this time, but we did see some very positive data from last Friday’s much anticipated employment report. It showed slowing wage inflation now looks increasingly like a trend. Overall, it was a solid report that will, in our opinion, allow the Fed to most likely hike rates one more time before taking a pause. The market has assigned a 70% probability the Fed will deliver one more rate increase at its May 3rd meeting. Equity market futures rallied on the news as the strong labor report is further evidence that the economy is not yet in recession. That being said, the data were prior to the collapse of Silicon Valley Bank and the concomitant stress to the global banking system. There are many data points that show a recession is likely. Much of that has been priced into markets, but we have no way of knowing whether the landing will be hard or soft. It will be as important as ever for investors to maintain a long-term perspective in the coming months.
We get a slew of inflation data this week. While the trend is certainly going the right way, there has not been enough demand destruction that would signal to the Federal Reserve they can stop increasing interest rates, but they appear to be very close. Hopefully, the data this week continue to show that inflation is in a cooling trend and a pivot is near.
Data Deck for April 10 – April 14:
|
Date |
Indicator |
Period |
|
Apr 10 |
Wholesale inventories |
Feb |
|
Apr 11 |
NFIB optimism index |
Mar |
|
Apr 12 |
Consumer price index |
Mar |
|
Apr 12 |
Core CPI |
Mar |
|
Apr 12 |
Treasury Budget |
Mar |
|
Apr 12 |
Minutes of FOMC meeting |
Mar |
|
Apr 13 |
Producer price index |
Mar |
|
Apr 13 |
Core PPI |
Mar |
|
Apr 13 |
PPI year over year |
|
|
Apr 13 |
Core PPI year over year |
|
|
Apr 13 |
Initial jobless claims |
Apr8 |
|
Apr 13 |
Continuing jobless claims |
Apr 1 |
|
Apr 14 |
U.S. retail sales |
Mar |
|
Apr 14 |
Retail sales minus autos |
Mar |
|
Apr 14 |
Import price index |
Mar |
|
Apr 14 |
Import prices minus fuel |
Mar |
|
Apr 14 |
Industrial production |
Mar |
|
Apr 14 |
Capacity utilization |
Mar |
|
Apr 14 |
Business inventories |
Feb |
|
Apr 14 |
Consumer sentiment |
Apr |
