With the Federal Reserve’s (Fed’s) first interest rate decision of the year just over two weeks away, investors will get more important data this week on U.S. economic growth and inflation.1 Retail sales data out Wednesday is expected to show its fourth monthly decline in the past six readings, confirming consumers are feeling the pinch of last year’s interest rate hikes.
Next up on Wednesday will be the Producer Price Index (PPI) report, which is expected to show price pressures continuing to ease. Headline PPI is forecast to be down 0.1% and core PPI up just 0.1% month-over-month. Thursday’s housing starts data and Friday’s existing home sales numbers will provide additional updates on the first economic sector to feel the impact of last year’s historic interest rate increases.
The bond market is pricing in another downshift in the size of Fed rate hikes, with a 25-basis-point increase expected Feb. 1. This week’s economic data should provide Fed policymakers with important information that is likely to confirm the improving inflation trends.
1Source: MarketWatch- U.S. Economic Calendar; as of 1/17/23
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