Nothing in life is certain — especially not Federal Reserve policy.
The rise in interest rates to quell the nation’s elevated level of inflation, as well as the presumption that they will have to stay higher for longer, has pushed up long-term Treasury yields this year. Fed Chairman Jerome Powell admitted that these market moves did some of the central bank’s work for it, as it is trying to cool an economy that is still going strong in the face of high rates, and stubbornly elevated inflation. In turn, consumer debt is getting more expensive, mortgages are just one prominent example.
At the November’s FOMC meeting, the central bank opted to hold the interest rates steady at 5.25-5.5%, as expected. Following the committee’s decision, the 10-year Treasury yield has fallen some 30 basis points, reversing some of that lauded help as markets increasingly bet that the Fed is, in fact, done raising rates. Market
expectations that rates will remain unchanged again in December topped 90% late last week, even after Powell reiterated the door to additional hikes remained open.
The next consumer price inflation report is due on Tuesday. Depending on what we get, it might sway market sentiment. A hotter report could be an argument for an additional rate hike, while a cooler report might signal the Fed could indeed be done. Look out for the Bureau of Labor Statistics inflation report on Tuesday morning.
The week will kick off with the New York Fed’s consumer inflation expectations for October. Expectations for price increases have risen over the prior two months, after reaching a more than two-year low of 3.5% in July.
On Wednesday, wholesale inflation will round out the week’s price index data. We’ll also get October retail sales data. Despite tighter monetary policy, consumer spending has increased for the past six months after a brief dip in March. The 30-year fixed-rate mortgage will also get its weekly update, after tumbling more than 20 basis points to 7.61% last week.
On Thursday, we’ll get a weekly update on jobless claims, and the NAHB housing market index will provide insight into the homebuilder market.
We’ll conclude the week with more housing data: Building permits and housing starts.
Tyson Foods (TSN) and, fittingly, Monday.com (MNDY) will kick off the earnings week. The world’s second-largest meat processor has had a tough few months. In August, Tyson Foods announced it was closing a 1,500-worker plant in Missouri, and last week, it recalled 30,000 pounds of chicken nuggets after some consumers found pieces of metal in the patties.
On Tuesday, Home Depot (HD), and Chinese music streamer Tencent Music (TME) will report Wednesday, more consumer companies will report, with big box retailers Target (TGT) and TJX Companies (TJX). Last quarter, TJX Companies said its discount stores like T.J. Maxx, Marshalls, and HomeGoods saw high customer traffic as inflation-weary consumers turned to their lower priced merchandise. We’ll also get a quarterly update from the tech company Cisco (CSCO).
Thursday will be the busiest earnings day of the week with reports from Alibaba (BABA), Bath & Body Works (BBWI), Macy’s (M), Gap (GPS), and Walmart (WMT). Walmart shares recently reached an all-time high in anticipation of the big-box retailer attracting more price-sensitive shoppers this holiday season.
On Friday, BJ’s Wholesale (BJ) will round the week.
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