The Week Ahead – Truckin’ On

Welcome to “The Week Ahead” where each Friday we take a moment to provide our thoughts on what we can expect in markets and the economy for the upcoming week.

This morning we saw the advance estimate for third quarter GDP come in at a healthy 3.0%. The final print for GDP that we saw for the second quarter was 3.1%, so this initial reading exceeded expectations as many investors had discounted a far more heavy dip due to disruption from the hurricanes that occurred during the summer months. An estimated 600,000 to 1,000,000 vehicles need to be replaced from Hurricanes Harvey and Irma alone per Cox Automotive, and in September we saw car sales hit their highest level since 2005. As Houston, Florida, Puerto Rico, and the Virgin Islands continue to rebuild we will see that flow through as tailwinds over the next few quarters.  

Across the Atlantic, the European Central Bank announced major changes to their asset purchase program for 2018. They decided to extend their QE program for another 9 months, but at reduced rate of €30B per month (half of the current €60B per month) and also left it “open ended."

It’ll be a very busy week next week headlined by the Fed meeting, a jobs report, PCE (inflation), and ISM manufacturing. The PCE reading will be watched carefully and as long as it is continuing to trend upward, should be a non-event. Our expectations for a December rate hike have not changed and we do not expect material announcements from the Fed at their meeting next week.

As noted in our most recent quarterly update Crystal Ball Gazing, the U.S. economy continues to truck forward and today’s GDP report reinforces that belief.

Data deck for October 28 – November 3: