Last Friday U.S. stock indexes made strong advances around 1 percent following a better than expected July non-farm payroll jobs report that helped to calm investor’s nerves about the health of the U.S. labor market and this week the July retail sales report will give investors a snapshot about the strength of retail sales in the U.S. economy.
Friday’s job report showed that 255,000 non-farm payroll jobs were added in July while June’s job report was revised higher from 287,000 to 292,000.
Positive job gains in the U.S. over the past 2 months, combined with rising inflation levels, and reduced global risks, helps to renew speculation about the U.S. Federal Reserve rising their prime interest rate with the federal funds in 2016.
Upcoming U.S. Federal Reserve meetings in September and December are “in play” for a possible gradual rate hike, although the upcoming U.S. general election in November could serve to complicate and delay the prospect of a September rate hike and the total U.S. growth rate for 2016 is expected to be lowered after 2nd quarter 2016 U.S. GDP disappointed the market in late July and was just 1.2 percent, missing the consensus estimate of 2.6 percent, according to briefing.com, and only slightly better than the 0.8 percent revised level in the first quarter of 2016.
On August 2nd the U.S. Bureau of Economic Analysis showed the Fed’s primary inflation gauge, core PCE inflation, rose 0.1 percent and came in at 1.6 percent in June after rising 0.2 percent in May to 1.6 percent.
The Fed has a 2 percent inflation target.
Central Global Banks Are Keeping Rates Low Through Monetary Easing
Global central banks in the EU and Japan have already implemented monetary policies of negative rates and on Wednesday England’s central bank voted to lower its prime interest rate to 0.25 percent, a new record low, as it also increased the purchase of corporate and government bonds to help support the British economy.
The Week Ahead
This week investors will pay close attention to new U.S. retail sales figures for July that are released on Friday for signs about the strength of retail spending in the U.S. economy.
Economists from briefing.com have a consensus forecast of 0.4 percent in July after retail sales increased by 0.6 percent in June.
PPI inflation figures for July will also be reported on Friday.
Overall economic data is relatively light this week.
Both U.S. presidential nominees will be giving economic speeches this week.
On Monday Republican presidential nominee Donald Trump will give an economic speech at the Detroit Economic Club and Democratic presidential nominee Hilary Clinton will provide an economic speech in Detroit later on Thursday, her campaign announced on Sunday.
Clinton’s economic speech is expected to promote her 100 Day Jobs Plan that seeks “to continue the economic progress made under President Obama and ensure the economy works for everyone, not just those at the top” her campaign stated.
Full Economic Calendar
Tuesday- Wholesale Inventories (June), Productivity- Prelim( Q2(, Unit Labor Costs (Q2)
Wednesday- Treasury Budget (July), JOLTS Job Openings (June), MBA Mortgage Index (8/06), Crude Inventories
Thursday- Initial and Continuing Jobless Claims, Export, Import Prices (July), Natural Gas Inventories
Friday- Retails Sales (July), PPI inflation (July), Michigan Sentiment (Aug), Business Inventories (June).
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