Morning Report: Inflation data looms large this week

Vital Statistics:

 LastChange
S&P futures4,10821.5
Oil (WTI)88.481.72
10 year government bond yield 3.29%
30 year fixed rate mortgage 5.96%

Stocks are higher this morning on no real news. Bonds and MBS are flat.

The upcoming week will be dominated by the consumer price index report tomorrow and the producer price index on Wednesday. On Friday, we will get the University of Michigan consumer sentiment survey which should include inflation expectations. There will be no Fed-speak this week as we are in the quiet period ahead of the FOMC meeting next week.

The Fed Funds futures see a 88% chance of a 75 basis point hike next week. The impact of 225 basis points in rate hikes (75 in June, July and September) hasn’t even begun to be felt. We could be looking at a major slowdown at the end of the year.

The Atlanta Fed GDP Now index now sees 1.3% growth in the third quarter.

Note that we will get retail sales this week, which should contain the back-to-school spending numbers. BTS is generally a good predictor of the holiday shopping season.

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