With the employment and retail sales numbers for September out of the way, market attention in the October 17 week will turn to data on inflation, housing, and manufacturing.
The Fed's Beige Book on Wednesday will provide an overview of economic conditions across the 12 Fed Districts for approximately the six weeks of late August through early October. This is not firm data, but it does tend to reflect the direction of economic activity in the hard numbers. This report will be used by the FOMC to help set the direction of monetary policy and influence the tone of the Committee's collective economic forecast. The prior issue of the Beige Book was more downbeat than the previous report, but it was also a time of greater uncertainty for businesses. While a complete turnaround is unlikely, the outlook should be improved.
The September inflation numbers will include some declines in food and energy prices. In particular, gasoline prices have fallen, and will be reflected in lower transportation costs. Some other recent sources of higher prices -- like motor vehicles, tobacco, and precious metals will also have eased. The Producer Price Index will be reported on Tuesday, and the Consumer Price Index is set for Wednesday.
The first looks at manufacturing activity in October will be reported on Monday with the New York Fed's Empire State Survey and the Philadelphia Fed's Business Outlook on Thursday. Both these indexes took a big hit in early August when the contentious debate about raising the statutory debt limit and the consequent downgrade in the S&P rating for US sovereign debt took place. Matters were not improved by the devastation in the Northeast from Hurricane Irene late in August that kept activity low into early September. While neither index may be ready to register a positive reading, there should be some evidence of improvement.
Industrial production and capacity utilization in September on Monday may offer a better numbers for output at manufacturers, and in mining and utilities as a slowing related to flooding in late August gives way to a bit of a rebound in the next month.
Initial jobless claims for the week ended October 15 on Thursday will include the survey comparison week to September. The level of claims appears to have settled around the 400,000-mark, which would represent a sizeable decline from the 428,000 in the September 17 week. The Treasury International Capital System (TICS) data for August at 9:00 ET on Tuesday will cover the period in which the S&P downgrade of the US debt rating occurred, as well as when euro zone sovereign debt problems intensified.
The Conference Board's Leading Economic Index for September on Thursday will probably lose some momentum after four months of positive readings. Small positive contributions from the workweek, claims, and the money supply will have to overcome sluggish spending on plant and equipment, weak confidence, and a plunge in the stock market.
There are no routine monetary policy announcements from major central banks...Read more