Thursday, June 13, 2024

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FOMC, CPR and Other Can’t Miss Items This Week

Gamestop (GME) stole the limelight last week with it being capped off by RoaringKitty having a live stream on Friday about his Gamestop position. Last week also had some positive news releases which helped us continue the previous Friday’s rally into the close this week. We finished up around 1.25% to $534.01 on the SPY.

This week we have several news releases and other headlines to watch out for with the biggest potential mover being the FOMC release on Wednesday.

Here are 5 things to watch this week in the Market.

Bond Auctions

While only partially apparent in some of the data, rates are starting to have an impact on the American consumer with debt numbers showing higher spending and a higher percentage of income going to debt servicing. In addition, the US debt is reaching levels never considered just a decade ago. These factors could all carry over into the foreign appetite for more US debt in the form of worse-than-expected performance in the 10-year and 30-year bond auctions this week. If these are weaker auctions we could see some carryover to the Equities market if investors get spooked.

CPI

Wednesday morning before the FOMC statement and Fed Funds rate announcement CPI is due out. Core inflation could be more important than the regular headline CPI print for the sole reason it does not include food or energy. This makes it a more concrete number for consumer prices. As a result, watching the difference between Core and headline could also show how much the prices of food and fuel contribute to the overall increase in prices. If we miss the inflation print and see prices are increasing at a slower rate, we could see the market rally. If however, we beat the estimate and come in hot we could see the market start to sell.

FOMC/ Fed Funds

Later on Wednesday, the Fed Funds rate is released with the accompanying press conference. With several central banks electing to start to cut rates, it could be interesting to see what Powell has to say from a press conference perspective. From an actual rate perspective, we are estimated to stay at 5.50%. If they stay in line with this, we could see market volatility pick up until the press conference for more insight. Any deviation from the expected rate could be seen as a negative and could be met with some selling pressure.

PPI

Similar to CPI on Wednesday, we have PPI on Thursday and where CPI is a large basket of items, PPI is strictly the change in the cost of finished goods. If we see a spike in PPI it could be seen as negative in the markets, especially on the back of the FOMC the day before. If however we miss and PPI comes in lower than expected, we could see the market rally into the end of the week.

Consumer Sentiment

The final piece of news of the week is the preliminary UoM Consumer Sentiment that’s out Friday morning. This number has been falling pretty steadily for the past few months and if this trend continues could be a catalyst for some market volatility. If we see an uptick in sentiment and a beat of the estimate of 73.0 we could see some hope enter the market and the market rally in response.

Best of luck this week and don’t forget to check out my daily options article.

On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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