The December 12 week’s focus will be on the Tuesday-Wednesday FOMC meeting, and the November data for retail sales and the CPI.
November’s CPI will be posted on Tuesday at 8:30 EST and the data could influence the outcome of the meeting. Expectations call for a 50-basis-point hike in the fed funds rate to a range of 4.25 to 4.50 percent. If the CPI shows an easing in upward price pressures, markets will be more confident that the slowing in rate hikes policymakers were signaling before the start of the communications blackout period (beginning midnight, December 3) will in fact be the decision. The CPI data could also influence the Summary of Economic Projections (SEP) and whether the current tightening cycle is topping out or whether continued rates hikes are in store. The SEP will be released along with the meeting statement at 14:00 EST on Wednesday.
Thursday’s highlight will be the retail sales report for November which will be posted at 8:30 EST. November’s decline in gasoline prices and weaker unit sales of motor vehicles point to a softening from October. What may save the report from being a disappointment is if core sales turn out to be better than anticipated. Anecdotal information about sales at brick-and-mortar locals isn’t promising, but it is possible that CyberMonday results will help lift the overall numbers.
The content of the retail sales report will also shape expectations for fourth quarter GDP. At about 2/3 the way through the quarter, estimates should begin to firm up. At present, the GDP Nowcasts from the St. Louis and Atlanta Feds both expect a positive quarter. While the two estimates are quite different with St. Louis’ at up 0.72 percent and Atlanta’s up 3.4 percent, the average of the two at up 2.1 percent points to modest expansion.
