Credit Ágricole: US Week Ahead - FJElite
- A much busier calendar lies ahead with the Fed’s Jackson Hole symposium in the spotlight. On the data front, highlights include PCE inflation, personal income & spending, GDP revisions and the preliminary estimate for the annual benchmark revision for NFP, among others.
- The Kansas City Fed’s annual Jackson Hole conference will arrive at the end of the week, with new Chair Kevin Warsh’s keynote speech the main focus. While past Chairs have used Jackson Hole as a stage to lay the groundwork for monetary policy decisions in the autumn in at least some years, we think Warsh will continue his policy of refusing to offer any type of explicit forward guidance and could instead take the opportunity to focus on what he refers to as big picture questions, making the case for the five task forces he created as one of his first acts as Chair.
- On the data front, while inflation remains too high overall, the data over the last couple of months has been a bit better, and we expect July PCE to follow suit. For core, we look for a 0.22-0.23% MoM increase that would see the YoY rate holding steady at 3.3%, though our forecast is close to rounding down to 3.2%. This is still above what the Fed would ideally like to see, but around 11 bp of the MoM increase would come down to portfolio management and investment advice, suggesting relatively benign underlying price pressures on the month when leaving this aside. This would keep the Fed on track to hold rates steady once again in September, in our view, though the decision is by no means locked in at this point with another month of jobs and inflation data to be released ahead of the upcoming FOMC meeting.
- On the other side of the mandate, the preliminary estimate for the annual benchmark revision for NFP is likely to be much smaller than the last couple of years, as the discrepancy between employment growth in the Quarterly Census of Employment and Wages and NFP is much more modest. Thus, we do not expect anything that would materially alter the picture for the labour market.