The Economic Week Ahead

With largely second-tier data coming up and some of the near-term uncertainty over policy actions eliminated after the FOMC meeting, we don’t expect any of the upcoming events to alter the economic outlook. The regional manufacturing indices, Empire and Philly Fed, should recover very modestly following outsized declines recently. The improvements will be “technical” in nature and we expect the overall level of activity will remain low. Headline PPI will probably slip modestly given the July weakness in energy prices, while the core measure will likely advance a benign 0.2%. Housing data should provide more of the same – pure weakness – as mortgage applications remain at depressed levels, builder confidence continues to wane, and incentives from tax credits are now extinct.

At the recent FOMC meeting the Fed seemed adamant about two things. First, they recognize the recovery has slowed and the future pace is likely to be more modest than anticipated. Second, in the near term they will support the market, but only through a watered down QE-esque reinvestment program, indicative of their cautious approach. In terms of speakers, Bullard (voter) is on deck and while his comments on deflation of late have made some waves, he is not likely to stray much from the FOMC consensus when he speaks about the economy. Despite what may appear to be an intriguing speech title (Inside the FOMC) Kocherlakota

Source: RBCCM Economic Calendar