The preliminary University of Michigan Consumer Sentiment survey’s August index was 71.2, a little lower than July’s 71.6. Consumers’ expected rate of inflation over the next year dropped slightly from 3.4% last month to 3.3%.
State of the market
The slight decline in inflation expectations did little to mollify the bond market, which still has a gloomier perspective after last week’s Consumer Price Index report. Worries over the state of the Chinese economy have not triggered a flight to quality, and Treasury yields continue to creep upwards.
As of this morning, chances of a rate hike at the Nov. 1 Federal Open Market Committee meeting stood at about 41% per Fed funds futures, as the market seeks to divine how the Federal Reserve will deal with stubborn inflation.
The Dow traded down this morning.
Tuesday, Aug. 15
Advance Retail Sales
Import Price Index
Empire State Manufacturing Survey
Wednesday, Aug. 16
Housing Starts/Building Permits
Industrial Production/Capacity Utilization
The Fed releases minutes from the July 26 Federal Open Market Committee meeting.
Thursday, Aug. 17
Philadelphia Fed Manufacturing Business Outlook
Weekly Initial Jobless Claims
There are no auctions of Treasury notes or bonds this week.
By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking
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