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Market Based Inflation Expectations Post-Fed

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What’s in Today’s Report:

  • Market Based Inflation Expectations Post-Fed

Futures are moderately lower on the news that President Trump will nominate Kevin Warsh as Fed Chair.

The Warsh nomination is a surprise (Waller and Rieder were the favorites) and he’s not the market’s first choice, as Warsh has been hawkish on the use of QE in the past.

Staying with politics, a deal apparently has been reached to avoid a government shutdown (which is a positive).

Today focus will be on the President’s Fed announcement and, again, while Warsh isn’t a negative for markets, it wasn’t the market’s first choice and that is why we’re seeing profit taking in gold and silver this morning (gold down 3%).

Outside of the Fed, we do get PPI (E: 0.2% m/m, 2.9% y/y) and some notable earnings from lenders/credit card companies: SOFI ($0.12) and AXP ($3.55).  Good commentary about consumer spending will be welcomed by the markets.

 

Why Do Markets Like Warsh Over Hassett?

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What’s in Today’s Report:

  • Why Do Markets Like Warsh Over Hassett?
  • Jobs Report Preview

Futures are trading lower with global equities this morning thanks to soft economic data out of Europe overnight with focus shifting to the November BLS jobs report today.

Economically, the EU Flash Composite PMI fell to 51.9 vs. (E) 52.8 in December from 52.8 in November while the U.K. Unemployment Rate rose to a 4+ year high of 5.1%; both data points raised concerns about the health of the global economy.

Today, focus will be on economic data early with the November BLS Employment Situation Report (E: 40K Job-Adds, 4.5% Unemployment Rate, 3.6% Wage Growth) and Retail Sales (E: 0.2%) due to be released ahead of the bell, both of which have the potential to move markets.

Additionally, data on Business Inventories (E: 0.2%), Housing Starts (E: 1.325M), the Flash Manufacturing PMI (E: 52.0) and Flash Services PMI (E: 53.9) for December will also be released and could move markets.

There are no Fed officials scheduled to speak today and earnings season is slowing down materially with just one quarterly report due today: LEN ($2.23) which will leave investors primarily focused on the key economic data due out early in the day.

 

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