Incoming economic “hard” data won’t reflect increasing signs of disinflation. Visibility on “I” matters more than “e”

Incoming economic “hard” data (over next few weeks) may not necessarily confirm the increasing signs of softening of inflation

There will be several incoming “hard” data points that will impact market views on inflation and economy and therefore impact Fed policy. Paramount remains inflation pressures and while many “soft” (surveys and market implied) and leading indicators (commodities, etc) have softened sharply, the actual data needs to be seen to assuage inflation concerns:

  • Friday is the June jobs report and Street consensus is NFP +237k
  • Consensus avg hourly earnings +0.3% m/m
  • Next week June CPI and +0.6% m/m is consensus (see below)

But in a sense, these “hard” data prints seem somewhat lagging with the visible data we are seeing. To recap, commodities both energy and food are down sharply, even rents are cooling (see below) and market expectations are falling as well.

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The S&P 500 closed at 3,903 and while this remains a depressed level, this is an improvement compared to levels seen in the past month:

  • S&P 500 closed
  • 3,900 post-May CPI “massacre” (June 10th)
  • 3,790 post-June FOMC (June 15th)
  • Still below technically important 3,946 (June 28th)
  • June NFP July 8th
  • June CPI July 13th
While there are a few important “ha...

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