Fed Minutes and Consumer Vibes

Estimated reading time: 5 minutes

After markets got off to a choppy start to October, Wall Street gets a pulse check on how businesses and consumers are feeling about the economic outlook.

At a Glance

• The news: Monday’s report on the service sector (ISM Services PMI) and Friday’s preliminary October consumer sentiment data  bookend Wednesday’s release of the Federal Reserve’s September meeting minutes.
• The context: Investors are still grappling with the Fed’s recent interest rate hike alongside this year’s spike in oil prices. Any context on how businesses and consumers feel will go a long way in determining if the economy can withstand the additional hikes Fed officials have suggested are coming.
• Your move: SoFi thinks it might be time to start dipping your toes into Treasurys and gold. These are generally defensive investments that tend to outperform during economic slowdowns or periods of global volatility.

Nearly 80% of U.S. economic output comes from services, making Monday’s ISM Services PMI important to gauge the economy’s trajectory. Investors will be interested in trends across hiring and prices, as unexpected changes could move market expectations for earnings growth and interest rates.

By midweek, we get September’s FOMC meeting minutes which help illuminate what happened in the room when officials decided to raise rates. Most officials indicated at least one more hike was likely by the end of the year. But traders will parse through the transcript for clues on what could make the Fed ease up — or amp up — on hikes.

The week wraps up with preliminary consumer sentiment data from the University of Michigan. Investors want to know how consumers view inflation — especially considering the latest rise in gas prices. If inflation expectations jump, expectations for a rate hike may jump too. If inflation expectations stay put, Fed officials may feel less pressure to raise rates any more. 

On the Docket

Monday

• 9:45am ET | September S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment. 
• 10:00am ET | September ISM Services PMI: This index from the Institute for Supply Management tracks how purchasing managers across different services industries feel about the business environment.
  

Tuesday

• 8:15am ET | ADP Weekly Employment Change: This survey offers insight into weekly private sector employment trends. 
• 8:30am ET | August Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity.
• Fedspeak: New York Fed President John Williams will moderate a discussion with the CEO of CLEAR at an event at the regional Fed bank. Dallas Fed President Lorie Logan will moderate a discussion with Agustin Cartsens, former GM of the Bank of International Settlements, followed by Q&A.
• Earnings
  • Large & Mid-Caps: Constellation Brands (STZ)

Wednesday

• 7:00am ET | Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market. 
• 11:00am ET | September New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more. 
• 2:00pm ET | FOMC Meeting Minutes: The Federal Reserve releases detailed notes of every FOMC meeting three weeks after their conclusion. Investors often look for more information on Fed officials’ views for hints on the outlook for interest rates and the economy. 
• 3:00pm ET | August Consumer Credit: Borrowing activity gives insight into broader economic activity.

Thursday

• 8:30am ET | Weekly Jobless Claims: This high-frequency labor market data gives insight into initial and continuing filings for unemployment benefits. 
• 10:00am ET | August Wholesale Inventories: Wholesalers and retailers often operate as intermediaries for the sale of manufactured products, serving as a key part of the goods supply chain. 
• Fedspeak: St. Louis Fed President Alberto Musalem will discuss the economy and monetary policy at an event hosted by Bloomberg, followed by moderated Q&A.
• Earnings
  • Large & Mid-Caps: PepsiCo (PEP)

Friday

• 10:00am ET | October University of Michigan Consumer Sentiment: Consumer feelings about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.
• Earnings
  • Large & Mid-Caps: Delta Air Lines (DAL)

Note: Companies with at least $200 billion in market capitalization are classified as “Mega-Caps,” while others are shown in the “Large & Mid-Caps” sections.

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