A First Foundation Blog

The Week Ahead – Too Early to Declare Victory

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. 

Equity markets rose this week, catching some relief from a softer-than-expected July CPI report. For the first time in 11 months, CPI data was weaker than expected. While a big chunk of this surprise was due to lower energy prices, inflation in other goods categories also showed signs of slowing, such as airfares, car rentals, and lodging.

The data was welcome news to FOMC officials, but as San Francisco Fed president Mary Daly said on Wednesday, “it’s still too early to declare victory.” Policymakers appear to be focused on the need to raise rates to a restrictive level and attentive to where inflation will settle absent additional aggressive action. In this vein, investors shouldn’t get too excited about an 8.5% y/y inflation print. While inflation-related data this week should help the Fed step down to a 50bp hike in September from 75bp in June and July, additional rate increases and an extended period of restrictive rates remain quite likely.

This week, the focus is on retail sales on Wednesday and the Philly Fed manufacturing index on Thursday. The minutes from the July FOMC meeting will be released this week, with several Fed officials set to speak. Thus markets will again be tuned for any insight on the potential policy rate path, and rates markets should continue to be volatile.

Data deck for August 13 - August 19:



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Calvin Jones, CFA, Managing Director of Fixed Income
About the Author
Calvin Jones, CFA, Managing Director of Fixed Income
Mr. Jones is a senior member of the First Foundation Advisors investment management team and is responsible for working closely with First Foundation’s financial advisors to develop investment strategies utilizing income assets to help clients achieve their financial goals. In his role, Mr. Jones serves on the company’s Investment and Asset Allocation committees and is responsible for leading and overseeing the firm’s fixed income assets. Mr. Jones joined First Foundation Advisors in 2011. His previous experience at ProShare Advisors included trading and analysis in global equity and derivatives markets for the world’s largest manager of leveraged and inverse funds. Mr. Jones earned a Bachelor of Engineering degree from the University of Pittsburgh and a Master of Science in Mathematical Finance degree from the University of North Carolina at Charlotte. He is a member of the CFA Institute and the CFA Society of Los Angeles. Read more