Week Ahead Preview

 

 

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(Source: BofAML)


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Consumer Credit 

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Rising growth of $14.0 billion is expected for consumer credit in July, after posting a moderate increase of $10.2 billion in a June result that showed a slight decrease for revolving credit.


Screen Shot 2018-09-09 at 2.12.32 PM(Source: BofAML)


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Producer Price Index 

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Cost pressures for producers have not likely abated, thus expectations are for an increase of 0.2% gains in headline, core, and “core core” PPI. There is risk of rounding up for headline PPI given energy prices saw a notable seasonally adjusted increase this month.



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(Source: BofAML)

Consumer Price Index

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Expectations are for continued momentum in August core CPI, with inflation increasing 0.2% MoM (0.20% unrounded). This would result in YoY inflation edging down to 2.3% after barkey rounding up to 2.4% in the prior report. Underpinning the forecast is shelter inflation, which is likely to post another solid gain of 0.3% MoM given tightness in labor and housing markets. Transportation services may remain elevated as airlines began to pass on higher fuel costs onto consumers in the last report. Similarly, household furnishings and recreation commodities also saw increases above recent trends in the last report, and there is potential for this to continue given that these categories are arguably the most sensitive to the proposed tariffs on $200bn of additional Chinese imports. On the downside, used car prices saw an outsized increase in July, thus a negative payback seems likely.

Headline inflation should grow 0.3% MoM, coming in above core. Due to base effects, YoY inflation would slow to 2.7% from 2.9%, with risk of rounding up to 2.8%. Energy prices fell modestly this month, but seasonal factors looked for a larger decline turning the move into a notable gain after adjustment. Meanwhile, food prices were likely soft.



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(Source: BofAML)

Import Price Index 

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Forecast consensus shows import prices to likely decline by 0.2% MoM and import prices excluding petroleum products declined 0.1% MoM in August. Strengthening of the dollar and the decline in oil prices should put downward pressures on import prices. If the pressures come are found to be true, import prices should increase by 4.0% YoY and import prices ex petroleum to increase by 0.9% YoY. Note that duties (i.e.. tariffs) are not counted in import price calculation.

Industrial Production 

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BofAml expects flat industrial production in August. Manufacturing production likely inched up only 0.1% MoM, held back by the slight decline in manufacturing payrolls this month. Mining production should also see a modest gain, following a decline in the prior report, as Baker Hughes rig counts have been more stable. Offsetting the gains in manufacturing and mining will be a contraction in utilities production. Given flat industrial production, capacity utilization is likely to be unchanged at 78.1%.

U. of Mich Sentiment

Expectations are that the University of Michigan consumer sentiment to rebound slightly to 97 in September’s preliminary reading from 96.2 previously. Sentiments should continue to be supported by strong growth and healthy labor markets although less favorable buying conditions and rising interest rates could provide a drag.




 

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(Source: BofAML)


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(Source: BofAML)

-R.W.N II

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