The next stop im my continuing effort to catch up with past correspondence takes me to a post titled "Pause At Last", in which I listed the major data releases leading up to the next scheduled decision point for the Federal Open Market Committee:
Here is what we will know -- or given the nature of data revision, think we know -- by September 20, when the FOMC is next scheduled to meet: July and August PPI, July and August CPI, July PCE (expenditure and inflation), July existing and new home sales, July durable goods orders and shipments, July retail sales, August employment, July and August industrial production, August ISM indexes for manufacturing and services, and one revision in second quarter GDP and productivity (and unit labor costs).
Jack Krupansky, blogmaster at Finaxyz Stock Market Commentary, comments:
... you omit the *information* of the Beige Book, and don't even hint at the availability of information concerning the "outlook" (or evolution of the outlook), such as the Treasury yield curve, TIPS, oil futures prices, other commodities futures, etc.
Good point, that. Financial data is the one thing we don't have to wait for, and there are certainly scenarios where this kind of information might push the Committee in one direction or the other. I guess I would point out that the ongoing inversion of the Treasury yield curve has yet to generate much observed anxiety, and that the range of things that might plausibly happen in oil markets -- and the speed with which they might happen -- makes it difficult to imagine very strong conclusions being drawn on the basis of a month's movements in price per barrel.
TIPS, however, could be a different issue. The Committee did, after all, explicitly condition its inflation outlook on the belief that inflation psychology remains in a state of low anxiety:
... inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.
Based on that assessement -- I added the emphasis -- one would suppose that a significant deterioration in inflation expectations would not go unnoticed.
That said, Tim Duy isn't convinced that much of anything we already know -- the rather benign July PPI report, the viewed-as-benign (but to my mind, not) July CPI report, the bearish news on existing home sales in July -- or anything we are likely to learn in the next couple of weeks is going to push the FOMC off the 5-1/4 perch. So far, the market bets are with Professor Duy.
Aside: JK also asks "is there any significant predictive value these days on the inflation front from the trend in the intermediate goods component of the PPI?" My thoughts on that question can be found here.