Inflation, Retail Sales, and Industrial Production on Tap. Besides the Fed meeting, markets will have plenty to chew on this coming week from the data calendar. Inflation readings, CPI and PPI for August will likely be stronger than we´ve seen in quite a while thanks to bursts in energy and gasoline prices.
Core rates of inflation, however, should be much softer, continuing an ongoing trend. Despite the weak jobs picture, retail sales for August are seen advancing somewhat robustly. Some of this is due to higher gasoline prices, but chain-store sales results suggest gains in other key categories.
Finally, industrial production likely sank in August as Hurricane Isaac cut oil, gas, and refinery output late in the month. Vehicle output was also down, and the rest of manufacturing was probably lackluster at best.
Tuesday, September 11 Trade Balance (Jul.)
The trade deficit likely widened by $1.5 billion to -$44.4 billion in July, the first widening after three consecutive months of narrowing. Outside of aircraft, across-the-board declines in exports are expected. Imports were likely flat with advances in capital and consumer goods offset by lower industrial supplies and autos.
Thursday, September 13 Producer Price Index (Aug.)
The producer price index likely gained 1.2% in August, with energy prices spiking 5.3%. Food prices are seen rising 0.5%. The core PPI, however, was likely flat thanks to a drag from motor vehicles prices.
Thursday, September 13 FOMC Meeting and Statement
Any lingering doubts that the Fed will ease again should evaporate with the disappointing jobs report. At the least, we expect the Fed to extend its guidance for an ultra-low fed funds rate into 2015 from "late-2014." We also now see a higher probability that the Fed will initiate a third round of quantitative easing. How far the Fed is willing to go will depend on members´ outlooks for the recovery, which they will likely downgrade and extend into 2015 from the current 2014 horizon.
Friday, September 14 Consumer Price Index (Aug.)
The consumer price index likely climbed 0.7% in August, with a nearly 10% rise in gasoline the major culprit, while food prices crept higher. Core CPI inflation was probably much softer at 0.2%, translating into 2.1% year-on-year ? the same as July.
Friday, September 14 Retail Sales (Aug.)
Retail sales are expected to rise 1.0% in August. Higher gasoline prices boosted gas station sales. Strong chain-store sales suggest gains in key spending categories despite the depressed consumer mood. Back-to-school sales were likely boosted by several tax-free weekends during the month.
Friday, September 14 Industrial Production (Aug.)
Industrial production is expected to have dropped 0.7% in August. Hurricane Isaac hammered oil and gas production in the closing days of the month, enough to cut mining output by 2.2%. Electricity, automobile, and truck production, meanwhile, all reversed July spikes. Refinery outages likely also cut another 0.1 percentage points off of manufacturing growth, turning an otherwise mediocre performance into a weak one.
Friday, September 14 Reuters/University of Michigan Consumer Sentiment Index (September, Preliminary)
The Reuters\University of Michigan Consumer Sentiment Index is expected to fall 3.3 points to 71.0 in the early-September reading. Rising gasoline prices, food inflation fears, and concerns about jobs are keeping consumers in a depressed state.
