With 41 days until the U.S. Presidential election and 43 days until the next FOMC meeting, we are expecting conversations around those outcomes to become a larger focus for investors. To help navigate the noise, we thought it would be helpful to lay out the upcoming economic and earnings calendar. Ultimately, the point of this exercise is to set expectations and provide a framework for monitoring incoming data so that we can adjust to new information as needed.
Our expectations are for inflation to remain above the Fed’s target and the labor market to continue moving toward pre-pandemic levels while layoffs fail to increase meaningfully. That scenario would likely lead to a delay in the FOMC rate cutting cycle and push market expectations for rate cuts out further.
September
With just a few days left in the month, September will serve up key consumer and inflation data from the month of August on Friday. We will also get annual revisions which should address the gap between Gross Domestic Product and Gross Domestic Income, which has widened by the largest amount on record in recent quarters. Additionally, Fed Chair Jerome Powell has two speeches scheduled, where we will be watching to see how he talks about PCE inflation and labor data, given the recent pivot in focus from inflation to labor.
Source: trading economics
October
We will get the September labor data on October 4th. While this is a highly revised series, a print below 100k would be noteworthy. The September Consumer Price Index will be released the following week on October 10th. Given the comparison set we have highlighted in prior posts, a y/y deceleration would not be a surprise for September, but we would revisit the forward-looking setup if the m/m comes in at or below 0%. All else equal, another rate of change deceleration in inflation could give the FOMC enough cover to cut again, but likely by less than 50-basis points, at their November meeting.
Outside of the U.S., Euro Area CPI flash estimate for September is set to release on October 1st. Like U.S. inflation, but on slightly different timelines, we are watching to see if a reacceleration occurs as the y/y comparison set eases in September. Turning to the U.K., GDP for August will be released on October 11th. Their data is important to watch because the Bank of England is in a similar spot that we believe the FOMC will be in by year end in terms of policy making and economic data – each having cut once, but delaying/reducing the magnitude of cuts as higher inflation and soft but not recessionary growth data rolls in. If their data continues its current path, the probability that the BoE pushes rate cuts out increases. For similar reasons (unexpected changes to policy and what it could mean for FOMC policy), we are monitoring data from the Euro Area, Canada, Australia, and Japan. The monetary policy meeting cadence is listed in bold within the table below.
In addition to the regularly scheduled macro data, we also want to highlight October 11th, when financial institutions start to report earnings. Within those presentations, we will note loan growth, delinquency rates, and charge-offs. By the end of October, mega-cap companies like Microsoft, Google, Amazon, and Apple will start to report earnings. These typically get significant media attention, but with the U.S. election just days away from their calls we will see if that reaction is more muted.
Source: trading economics
November
Turning to November, we will get October’s labor data on the first day of the month, a Friday. The following Monday is Election Day, and three days later the FOMC will meet. While we cannot know the outcomes of those three events, we would expect to see heightened volatility in fixed income and equity markets leading up to them.
Source: trading economics
Over the next few weeks, we will provide updates related to how the data moves relative to our current view.
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Investment Strategist
Boyd Watterson Asset Management, LLC