The Week Ahead; Fed Minutes In Focus

movinInvestors will be watching the Fed minutes on Wednesday for clues about how likely Fed committee members are to begin raising interest rates at the Fed’s next meeting in September.

The Federal Reserve hasn’t raised interest rates since 2006 and low interest rates have clearly helped the U.S. economy to recover since the global recession accelerated in 2008.

Although a batch of employment data over the past several months suggests the U.S. labor market is on solid footing with a 5.3 unemployment rate and consistent job gains over 200,000 per month, U.S. inflation levels remains stubbornly below the Fed’s 2 percent inflation target.

A strong U.S. dollar combined with oil prices currently at a 6 1/2 year low are also putting a lid on growth expectations while adding to deflationary pressure across the U.S. economy.

Fed members are debating about whether the U.S. economy is strong enough to absorb an upcoming interest rate hike.

The Fed minutes on Wednesday will provide more clarity about how soon Fed members are interested in raising interest rates in 2015.

The two timelines currently on the table are in September or December.

Last Tuesday China’s central bank, which has over 5 trillion in assets, the highest balance sheet in the world, agreed to enact some exchange rate reforms as it devalued the Yuan by 1.9 percent and then 1.6 percent on Wednesday, causing the Chinese currency to fall to a 4 year low after economic data released last week-end suggested that China’s economy is cooling.

This week investors will be eyeing more U.S. housing, inflation, and manufacturing data this week as well as crude inventories.

Economic Calendar

Monday- Empire Manufacturing (August), NAHB Housing Index (August)

Tuesday- Housing Start, Building Permits (July)

Wednesday-Fed Minutes released from 7/29/15, CPI and Core CPI (July), Crude Inventories (August 15th), MBA Housing Index (August 15th)

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

* My last post on Friday initially reported that oil prices fell to a 6 1/2 month low, a true statement, but it was later changed to 6 1/2 year low because oil prices fell to that lower level.

-John Schweitzer

 

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