Wolf pack sightings aren’t uncommon in Grand Teton National Park. But this week, Fed Chair Jerome Powell may find himself fending off a large pack of them again as Federal Reserve officials gather for their annual retreat in Jackson Hole, Wyoming.
The two-plus weeks since July's week employment surprise have given economic pessimists room to roam. Weaker-than-expected data, though, now confront hotter inflation sightings. Given the core CPI rising 3.1% y/y in July and the most significant jump in producer prices in three years—0.9% m/m—markets are waiting with bated breath for Powell's speech (Fri).
In the days before that, Fed Governors Michelle Bowman and Christopher Waller, the dovish dissenting duo, will speak in Wyoming (Tue and Wed, respectively). Both dissented with the majority decision not to ease at the Federal Open Market Committee’s (FOMC) July meeting. Though they’ll be speaking at a blockchain symposium, it's hard to see either rate-cut advocate missing a perfectly timed opportunity to opine that the economy needs a rate cut. We maintain that it’s not howling for an immediate rate cut whatsoever but is more resilient than the July dissenters think.
At the margin, the minutes of the July 29-30 FOMC meeting (Wed) could fill in some blanks about how dug in the doves were and how intransigent the inflation hawks might've been in late July.
Here's a look at the data releases this week that are most likely to influence the hawks and doves on the Federal Open Market Committee:
(1) Housing starts. High mortgage rates, lots of economic uncertainty, and a glut of homes for sale probably weighed on July housing starts (Tue) (chart). They likely dropped a bit from June's 1.32 million unit pace (saar).
