The Federal Reserve meets this week and Wall Street gets a bonus, with news on both interest rates and an update of the so-called “dot plot” rate-predicting tool. Odds are at 96% for a 25-basis point (bps) rate cut, according to the CME FedWatch tool. We agree, advises John Eade, president of Argus Research.
The Fed will also offer a glimpse at its Summary of Economic Projections. The report shows the leanings of individual Fed members and is a good predictive tool on the future direction of rates.
In addition, we’ve gotten data on retail sales, industrial production, and capacity utilization. On Wednesday, we see housing starts and building permits, followed by GDP and existing home sales on Thursday and the Personal Consumption Expenditures Index on Friday.
Argus Chief Economist Chris Graja’s Call of the Week is retail sales. He says: “Retailers are offering their best deals to win business and, despite some choppy spending throughout the year, consumers have responded to special events like back-to-school shopping...While Black Friday and Cyber Week are behind us, Super Saturday (the last Saturday before Christmas) is coming up and is always one of the biggest shopping days of the year.”
Last week, CPI rose to 2.7% for November from 2.6% in October. Core CPI was 3.3% in November, matching October. Mortgage rates dropped 9 bps, with the average 30-year fixed-rate mortgage now at 6.6%, according to Freddie Mac.
Gas prices fell two cents, with the average price for regular gas at $3.01 per gallon. The Atlanta Fed GDPNow indicator is forecasting for 4Q and calls for expansion of 3.3%. The Cleveland Fed CPINow indicator is now forecasting for December and is at 2.86%.
Looking ahead, the Federal Reserve meets at the end of January, with a rate decision on Jan. 29, 2025. Argus forecasts three 25-bp rate cuts in the first half of the new year.
