Latest / Markets with Megan: A Quick Financial Markets Update / Economic Data's Role in Upcoming FOMC Deliberations | Episode 159 | 07-30-24

Transcript

Economic Data's Role in Upcoming FOMC Deliberations | Episode 159 | 07-30-24 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: Today it's Tuesday, July 30th, and it's the day before the big FOMC meeting that we get for tomorrow, July 31st, and we got the first big batch of economic data ahead of this Fed meeting tomorrow.
• 0:15
  Megan Horneman: So let's go in and talk a little bit about some of the data we got.
• 0:18
  Megan Horneman: It's more than just the housing market.
• 0:21
  Megan Horneman: There's also some information in here that we got about the labor market.
• 0:24
  Megan Horneman: So first of all, from a housing perspective, prices again still elevated on a year-over-year basis.
• 0:30
  Megan Horneman: They're growing 6.8% on a year-over-year basis, but it is coming down from a revision last month of 7.25.
• 0:39
  Megan Horneman: So this deceleration in home prices, the Fed's going to want to like to see that and this is what we need to see in order to get that shelter component in line with what the Fed needs.
• 0:50
  Megan Horneman: But when you look at the jobs reports that we got today, very mixed picture.
• 0:55
  Megan Horneman: So first of all, the JOLTS report.
• 0:57
  Megan Horneman: This is the amount of job openings there are out in the economy and while it did fall slightly from the last month from 8.2 million to 8.1 million, it was much higher than was anticipated.
• 1:09
  Megan Horneman: So this would tell the Fed the labor market still is a little bit too tight.
• 1:13
  Megan Horneman: But we also got a consumer confidence report and we love the consumer confidence reports because that should correlate with spending and what we saw in the consumer confidence report that consumer confidence actually increased.
• 1:26
  Megan Horneman: It did increase in the month of July, but what we saw was the biggest increase was really in the expectations for the future.
• 1:35
  Megan Horneman: Confidence on the current conditions still remain weak.
• 1:38
  Megan Horneman: Now when we look at expectations for the future, that's good because that can mean that consumers may still spend, given the anticipation that things will get better in the future.
• 1:45
  Megan Horneman: That's good because that can mean that consumers may still spend, given the anticipation that things will get better in the future.
• 1:49
  Megan Horneman: But when you dig underneath of some of the details in that consumer confidence report, there's this thing we like to look at called jobs plentiful and jobs hard to get.
• 1:56
  Megan Horneman: So this is the opinion from consumers that think that there's jobs that are plentiful out there.
• 2:01
  Megan Horneman: If they think that there's a lot of jobs out there, they feel confident they may spend more.
• 2:06
  Megan Horneman: But what we're seeing is this indicator has been deteriorating quite a bit over recent months and it deteriorated again in July.
• 2:14
  Megan Horneman: That contradicts what we're seeing in that job posting number.
• 2:18
  Megan Horneman: The reason we bring this up is because the Fed has a very difficult job.
• 2:21
  Megan Horneman: It seems like they get one step forward with economic data that can support rate cuts as early as September and then they might get two steps back.
• 2:31
  Megan Horneman: So there still is a lot of more information that we'll get between now and September.
• 2:36
  Megan Horneman: We think a July rate cut tomorrow is absolutely off the table.
• 2:40
  Megan Horneman: We don't think that at all, but we will get a lot more information between now and September that can either support that rate cut or not.
• 2:47
  Megan Horneman: These are the things we're looking at.
• 2:49
  Megan Horneman: We're going to look at the many different inflation indicators that we'll get between now and then.
• 2:53
  Megan Horneman: We'll also get two employment reports between now and then.
• 2:57
  Megan Horneman: We're going to want to look at not only the unemployment rate but also wages, because we've often said wages can be sticky and can result in higher inflation, and the Fed is going to be watching that.
• 3:08
  Megan Horneman: So sit tight, We'll be back tomorrow, on the 31st, with some results from the Fed meeting and we'll give you our idea of whether or not we think that September may be on the table for the first rate cut by the Fed.
• 3:20
  Megan Horneman: Thank you very much, and if you like this, please like.
• 3:24
  Megan Horneman: If you like our podcast, please like it, share it, send it to family members, and if you'd like to see other podcasts, please reach out to marketswithmegan.
• 3:31
  Megan Horneman: fm.
• 3:33
  Megan Horneman: Thank you.