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Markets Off to Strong Start; Investors Await August Inflation Reports

Monday, September 12, 2022 04:36 PM | Neal Farmer
Markets Off to Strong Start; Investors Await August Inflation Reports

Markets are off to a strong start this week with the S&P 500 rising 1.06% and Bitcoin (BTC) bouncing back as the coin is up 3.5% over the last 24 hours.

Highlights for the Week

Looking ahead, investors eagerly await new inflation data coming from the August Consumer Price Index  and Producer Price Index reports on Tuesday and Wednesday, respectively. Traders are currently expecting another big interest rate hike next week as Fed officials have signaled a big increase, most likely either 50 or 75 basis points, based on recent remarks. Should inflation data come in worse than expected, the central bank will most likely opt for a 75 point hike or higher.

Meanwhile, earnings reports will be very light this week with the biggest names being Adobe (ADBE) and Oracle (ORCL). Other names set to release quarterly performance include Braze (BRZE), Core & Main (CNM), BRP Inc. (DOOO), and Manchester United (MANU).

New Economic Data

The CPI and PPI reports for August start the week off. The CPI is expected to show overall consumer prices falling 0.1% in August after staying flat in July. Core prices (excluding food and energy) are meanwhile projected to rise 0.3%, matching the increase from the previous month. Producer prices are currently expected to show the same changes as consumer prices in August despite significant differences in July. Overall producer prices actually fell 0.5% in July while core prices increased 0.2%.

The current price projections are high after high inflation recently. It should be noted that energy prices are having a massive impact on the overall numbers as prices drop from highs set shortly after the Russian invasion of Ukraine. Core prices, which exclude excluding the change in food and energy, are also in a solid place though as they are currently expected to be around that targeted 2% annual inflation rate.

Inflation reports aren’t the only big-ticket items this week though, retail sales, unemployment claims, and consumer sentiment updates are also on the docket. Retail sales are projected to stay flat for the second month in a row while unemployment claims are expected to rise from 222,000 claims to 233,000 new claims. Meanwhile, the preliminary reading for the University of Michigan’s Consumer Sentiment is projected to rise to 60 in September after a 58.2 reading in August.

Finally, wrapping up the dense economic data week are the Industrial Production and Capacity Utilization reports. Industrial production is expected to stay flat after rising 0.6% in July with capacity utilization also projected to stay flat at 80.3%. The overall theme for the week appears to be stagnation as capacity utilization, industrial production, and retail sales are expected to stay flat with overall prices expected to mostly stay flat with an expected 0.1% dip.

Economic Events this Week

Tuesday

- 8:30 a.m. - CPI & Core CPI

Wednesday

- 8:30 a.m.- PPI & Core PPI

Thursday

- 8:30 a.m. - Initial & Continuing Claims

- 8:30 a.m. - Retail Sales

- 10:15 a.m. - Industrial Production & Capacity Utilization

Friday

- 10:00 a.m. - University of Michigan Consumer Sentiment - Prelim

Earnings Reports This Week

Tuesday:

Before the bell:

CNM

Wednesday:

Before the bell:

DOOO

Thursday:

After the bell:

ADBE

Friday:

Before the bell:

MANU

Sector and Industry Sentiment

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