US stocks (^GSPC, ^DJI, ^IXIC) are mixed on Monday morning as Wall Street gears up for a busy week of crucial economic data including July’s Consumer Price Index (CPI), Producer Price Index (PPI) and US retail sales. The Federal Reserve has repeatedly mentioned how economic data will impact policy decisions, so could this change the odds for an interest rate cut at the September FOMC meeting that has been priced in by most?
Jefferies senior US Economist Thomas Simons joins Catalysts to give insight the buys week of data and what investors need to know about potential market movements moving forward.
In terms of how the Fed will proceed with its monetary policy, Simons says: “I think maybe they go twice this year, 25-basis-points apiece. And then I’m only expecting at this point maybe 50-basis-points of cuts in each of the next two years as well. I think the Fed needs to be very, very careful about understanding that rate cuts could spark some significant demand in areas that are interest rate sensitive.”
Simons finds the US economy to be in “pretty decent shape overall” with “certain sectors are doing a little worse than others.”
“Certainly manufacturing and housing too, they will probably do a little bit better with modest rate cuts. But, you know, this is about maintaining a balance and trying to make sure that inflation doesn’t get away from their control once again… So if things are starting to unravel in some way or labor market is starting to do quite a bit worse, then I would be very happy to pencil in more cuts.”
For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Nicholas Jacobino
