All Eyes on This Week’s Economic Data: What It Means for The Fed’s Upcoming Decision

Jerome Powell’s Jackson Hole speech hinted that upcoming economic data will heavily influence the Federal Reserve's rate adjustment decision scheduled for September 20, all eyes are on this week's release of indicators. The market is anticipating whether the data will point to a cooling economy, which could ease the pressure for Quantitative Tightening (QT) and minimize the likelihood of rate hikes beyond December.

As it stands, the Fed Funds Target Rate is pegged at 5.50%, with the effective rate at 5.33%. The market has priced in a continued hike with September’s implied rate at 5.35%, December's at 5.50%, and an expected rate decrease at the end of Q1 2023 to 5.43%.

Key Economic Indicators to Watch This Week

Tuesday

  • June FHFA House Price Index MoM: Estimated at 0.7%, it came in lower at 0.3%.
  • June S&P CoreLogic CS 20-City YoY NSA: The actual figure was -1.17% against an estimate of -1.60%.
  • July JOLTs Job Openings: The estimate was 9.5 million; the actual figure was 8.827 million.
  • Conf. Board Consumer Confidence: While previously at 117, it has dropped to 106.1.

Wednesday

  • ADP Employment Change: 195K (Estimate).
  • MBA Mortgage Applications: -4.2% (Prior).
  • GDP Annualized QoQ: 2.4% (Estimate).
  • Core PCE Price Index QoQ: 3.8% (Estimate).
  • Pending Home Sales MoM: -1.0% (Estimate).

Thursday

  • Initial Jobless Claims: 235K (Estimate).
  • Continuing Claims: 1.706M (Estimate).
  • Personal Income: 0.3% (Estimate).
  • Personal Spending: 0.7% (Estimate).
  • Chicago Business Barometer: 44.3 (Estimate).

Friday

  • Change in Nonfarm Payrolls: 170k (Estimate).
  • Change in Manufacturing Payrolls: 1k (Estimate).
  • Unemployment Rate: 3.5% (Estimate).
  • S&P Global US Manufacturing PMI: 47 (Estimate).
  • Construction Spending MoM: 0.5% (Estimate).

With Jerome Powell and the Federal Reserve closely scrutinizing this week's economic indicators, market participants are braced for the potential implications these could have on monetary policy. As we inch closer to the pivotal FOMC decision on September 20, these numbers could very well set the tone for the financial markets for the remainder of the year and beyond.