Fed Policy In Spotlight This Week

stockFederal reserve policy will be in the spotlight again this week as central bankers convene in Jackson Hole, Wyoming on Thursday for their annual 2-day meeting to discuss monetary policy issues.

Federal Reserve Chair Janet Yellen will be present at the meeting and is expected to speak about the nuances of  employment and wage growth.

It is highly doubtful that Janet Yellen will talk again about high valuations in the technology sector which raised some eyebrows when she broached the topic in July.

On Wednesday the minutes from the Fed’s July meeting will be released.

Investors will be watching closely in the minutes for any cues or signs about when the Federal Reserve may begin to tighten monetary policy in 2015 with short term interest rates held through the federal funds that have remained at an historic low of .025 percent since December 2008 during the depths of the recession.

Economists are debating the necessity for monetary stimulus with short term interest rates amid an improving job market and rising inflation that is inching closer to the Fed’s 2 percent inflation target, as measured by the annual rate of change in the price index for personal consumption expenditures (PCE).

New inflation data will emerge this week on Tuesday with CPI and core CPI for July.

CPI is the most widely cited inflation indicator.

Here is a closer look at some of the other economic data that will be released in the week ahead:

Monday-August data from the NAHB Housing Market Index, an index based on a monthly survey of members belonging to the National Association of Home Builders (NAHB)

Tuesday-Housing starts, Building Permits for July in addition to CPI, core CPI (July)

Wednesday- Fed Minutes, Crude Inventories, MBA Mortgage Index

Thursday-Initial Claims, Continuing Claims, Existing Home Sales (July), Philadelphia Fed, Leading Indicators, Natural Gas Inventories.

Last Friday global equities faced selling pressure and the U.S. 10-year Treasury yield fell to a low of 2.30 percent on Friday, the lowest level since June 2013, after reports surfaced that the Ukrainian military destroyed  a Russian military column after it crossed into Ukrainian territory on Thursday night.

On Monday Russia’s Foreign Minister Lavrov said that Russia had agreed with Ukraine on a plan to send humanitarian aid to eastern Ukraine but no progress was made over the week-end to reach a ceasefire and end the military strife that is occurring in eastern Ukraine between pro-Russian separatists and Ukrainian forces.

-Johnathan Schweitzer


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