Big Week for Economics and the future of interest rates.
Tomorrow the Case-Shiller report home price index and Consumer Confidence Index.
Wednesday is the big day. The Federal Reserve will announce their decision on interest rates. Following will be the Chairman's press conference which will shed light on their thinking moving forward.
Then Thursday, the first report on second quarter GDP and Friday the Personal Consumption Expenditures index(PCE) and employment cost index will be released. These two days could either confirm the Fed's analysis or completely change the outlook.
Most prognosticators believe the Fed will raise rates by .25% on Wednesday. The debate as to whether they continue to raise rates in September will more likely get hotter when Thursday and Friday's reports are released.
Personally, I believe the Fed will not be as Hawkish (higher rates) in their press conference but will also not take one more hike off the table. They do not want to kill the economy but they are also scared inflation rate will stop its trend of moving lower. Finally, they are also aware that after September the Presidential election campaign is just a few months away. They have traditionally tried not make the Fed and what they will do a campaign issue. However, it always is and will be again.
August is normally a sleepy month but it could be very influential this year.
The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.