This week in the economy, we’ll get a look at the health of the housing industry. But the real market mover could be the Stock market again.
Reports to Watch
The information below is a highlight of the reports due out this week. For more detailed information and insight, view the Economic Calendar, the Daily Market Update, and our exclusive Market News. And don’t forget, you can easily download the Economic Calendar to your Outlook Calendar to make sure you don’t miss important economic releases. Just click here to read instructions for downloading to Outlook.
- On Tuesday, the Producer Price Index (PPI) will be released. This report provides information about inflation at the wholesale level. Last month, the Labor Department reported that the Producer Price Index rose 1.7%, which was more than double expectations. This week, the index is expected to be reported at 0.1% for September.
- Also on Tuesday, we’ll get a read on the housing market with a report on Housing Starts and Building Permits. In last month’s report, Housing Starts rose to 598,000, which was the highest level since last November. Building Permits, on the other hand, came in a bit shy of expectations at 579,000. All in all, it was a decent report and suggested that the worst in the housing market may have passed. We’ll see if that line of thinking continues this week when Housing Starts are expected to be reported at 607,000 and Building Permits are anticipated to hit 590,000.
- The Fed’s Beige Book--officially known as the Survey on Current Economic Conditions--will be reported on Wednesday. This report is published eight times per year and contains anecdotal information on the current economic and business conditions. It reflects data from bank reports, as well as interviews with key business contacts, economists, market experts, and other sources. Although some people consider the Beige Book to be a lagging report, it can serve as a helpful indicator of the Fed’s policy decisions.
- Thursday will bring another Initial Jobless Claims report at 8:30 a.m. (ET). This weekly report continues to be important to watch as the job market plays a key role in our economic recovery. In last week’s report, Initial Claims fell 10,000 to come in lower than expected at 514,000. But that number still represents an enormously high amount of new people filing for jobless benefits in what continues to be a weak labor market.
- The week ends with a look at Existing Home Sales on Friday. Last month, Existing Home Sales were reported at 5.10 Million, which was less than expectations of 5.35 million and the first decline in five months. However, there was some good news in the report, as inventories of unsold homes fell to an 8.5-month level…the lowest inventory level seen since April 2007. This week’s report is expected to climb back up to 5.38 Million.
The X Factor
There are no Treasury auctions this week, except for the regularly scheduled T-bill auctions. However, on Thursday, the Treasury Department will announce next week’s auctions. Depending on the size of the auctions and how the announcement is received, this could add volatility to the market later this week.
In addition, corporate earnings could play a big role in the markets this week. The earnings report season ramps up even more this week with perhaps the biggest week of reports due out. These reports will determine the fate of Stock prices, which could in turn move Bonds. So keep an eye on the earnings reports and market reactions as we go through the week.
The Bottom Line
Last week, the Core Consumer Price Index was reported higher than expected, indicating that inflationary forces may be underway. In addition, Capacity Utilization was reported well below the 80-85% range, which would present inflationary pressures from the manufacturing sector.
We’ll see more news this week on inflation. But the bottom line is that even if it appears to be low now, inflation will likely grow in the weeks and months ahead--which means, we’re probably looking at the lowest rates for the foreseeable future.
Courtesy of Mortgage Market Guide.