US: Key sensitive releases could impact on market pricing for the Fed - BNZ

Research Team at BNZ, suggests that there are three key market sensitive releases for the US this week which could impact on market pricing for the Fed.

Key Quotes

“The first event is a US Fed speech by Governor Brainard Monday, then US Retail Sales Thursday and the CPI Friday. Other data out during the week include the NFIB Small Business Optimism Index Tuesday, and the Current Account and Industrial Production Thursday.

First up is Governor Brainard. We have not heard from Governor Brainard for some time and her views are understood to be influential within the FOMC. Brainard is characterised as one of the most dovish FOMC members, and given the trio of weaker-than-expected US data (Manufacturing ISM, Payrolls, and Non-manufacturing ISM) it is likely that she continues that dovish tone. Any deviation from that stance would likely see market pricing for a rate hike tighten.

For Retail Sales the market is looking for an “Ex Autos and Gas” increase of 0.3% m/m, well up on the 0.1% fall experienced last month. There could be some risk that the Louisiana floods in August impinged on sales, though Hurricane Katrina in 2005 did not seem to have a material impact on measured sales. The Louisiana floods have the potential to affect other macro data out in the US in August (for example trade through the Gulf as it did with oil imports), damage so far is estimated at $8bn and counting) so is worth remembering when interpreting the monthly indicators.

Finally the week is rounded out by the CPI on Friday. Core CPI (CPI ex food and energy) has been creeping up over the past year. While the Fed targets the PCE.”