It could be a very volatile week ahead as the market deals with factors that could slow US economic growth in the short term.
The Fed symposium in Jackson Hole failed to offer any distinct direction on the state of the US economy, but recent Fed commentary suggested that a government shutdown off the budget ceiling battle and the possible effects from Hurricane Harvey could impact policy decisions next month.
Commodity markets appear to have put in a significant low on June 22nd, right into the crude oil low and also in line with the first day of summer.
While the markets always present a wide range of potentially impactful issues, the current list seems to be unusually broad.
Consumer spending in the US grew at a 0.3% rate in the first quarter, the smallest increase since the fourth quarter of 2009.
We hope that the Fed isn’t wrong about the recovery continuing, and we hope that the weak US data is a temporary trend and that the US economy is merely taking a pause.
The US data has been patently discouraging; the Trump administration continues to squander political capital; and the prospect for pro-growth policy initiatives continue to be pushed further and further into the future.
While the inevitable happened in the March FOMC meeting, the reaction in the dollar was very surprising and was modestly supportive to a number of commodities.
It would appear that the markets are locked and loaded for a March 15th rate hike, with some players suggesting an increase in probability that there will be three hikes this year.
Recent US economic data has shown some signs of improvement, with industrial production, housing starts and jobless claims all indicating positive progression.