High points for economic data scheduled for October 21 week

It is a fairly light data release schedule in the October 21 week. Markets are likely to be jittery with the US presidential election on November 5 only about two weeks distant. Then there is the next FOMC meeting on November 6-7 (Wednesday-Thursday) and along with it expectations for another rate cut, albeit a smaller 25 basis points after the 50 basis points on September 18. Not only could the outcome of the election change some of the landscape for financial markets, but Fed policymakers are data-dependent. Recent reports suggest that disinflation isn’t progressing as quickly as might be hoped, although not stalled at the moment. Inflation expectations for the medium term are also proving stubbornly reluctant to decline further. And the underlying data for the labor market points to relatively stable conditions with hiring slow, but job separations more-or-less steady. A vigilant FOMC is not going to ignore the inflation data and the risks to the labor market appear less. The outlook for removal of monetary policy restriction will be for steady, cautious increments. The decision on September 18 was not unanimous and the current data poses no sense of urgency for lowering the fed funds target range in big chunks and/or at an accelerated pace.

The communications blackout period around the November FOMC meeting will go into effect at midnight on Sunday, October 27, one day later than usual because the meeting is starting one day later than the normal Tuesday-Wednesday pattern. Fed policymakers do not meet on election day to avoid any appearance of political bias.

The next Beige Book is set for release on Wednesday at 14:00 PM and will cover the period between late August and mid-October. Given the impacts from Hurricanes Helene and Milton, reports out of Atlanta, Richmond, and St. Louis could well pull the overall tone of the report down. Coming on the heels of a lackluster assessment of conditions in the prior Beige Book, it could cause some handwringing about the US economy. However, severe weather impacts in one report are usually followed by a rebound in the next when recovery efforts have a stimulative effect. The worries about labor market conditions that prevailed in the prior report have largely been alleviated. Any recession signals from two weak reports in a row should be taken in context and not provoke recession fears. The Beige Book is anecdotal evidence, while the hard data continues consistent with expansion.

The September data on sales of new single-family homes on Thursday at 10:00 ET should reflect sales with mortgages taken out in that month when rates were sliding to their lowest in two years. The favorable rates should encourage buying of units at all stages of construction to secure lower monthly payments. The September data on sales of existing homes on Wednesday at 10:00 ET will be for contracts signed mostly in July and August when mortgage rates had only begun to moderate. Sales of existing homes may not looks as robust in comparison with new construction.