Key Week for US Investors: 9 Fed Officials Speak, Earnings Season and CPI Data

Last week, the fluctuating employment data and the hawkish remarks from the Federal Reserve caused a severe market turbulence, with the bond market being particularly affected, and the 2-year Treasury yield briefly surged to 5%.

In this week, the focus of the market will be on the released CPI and PPI data, University of Michigan survey, major bank earnings reports, the Fed's Beige Book, and speeches from at least 9 Fed officials, which will determine the future direction of the US stock and bond markets.

The following is the schedule, all in Eastern Time:

July 10, Monday

10:00 AM - US May Wholesale Inventories MoM Final (unchanged, consensus -0.1%, previous -0.1%)

10:00 AM - Speech by Fed Governor Barr:

Fed Vice Chairman for Supervision, Michael Barr, participated in a discussion on bank regulation at the Bipartisan Policy Center.

He stated that over the past year, the Fed's monetary policy has made significant progress and is close to its target, but there is still work to be done.

11:00 AM - Speech by San Francisco Fed President Daly (non-FOMC voter):

San Francisco Fed President Mary Daly discussed inflation and bank regulation at the Brookings Institution.

Daly stated that the current US inflation rate is still too high and two more rate hikes are needed:

It looks like we need to raise rates twice more to contain inflation. The Fed should base its policy decisions on economic data. The bigger risk the Fed faces now is not raising rates enough, rather than raising rates excessively, although the gap between the two is narrowing rapidly.

11:00 AM - Speech by Cleveland Fed President Mester (non-FOMC voter):

Cleveland Fed President Loretta Mester discussed the economic and policy outlook at an online event hosted by the University of California, San Diego, stating that in order to ensure inflation returns to 2%, rates need to be further raised and maintained for a period of time:

The US economy has proven to be more resilient than expected earlier this year, and inflation remains stubbornly high, with core inflation still persistent.

In order to ensure that inflation can sustainably and promptly return to 2%, my view is that rates need to be further raised from their current level and then maintained at that level for a period of time.

12:00 PM - Speech by Atlanta Fed President Bostic (non-FOMC voter):

Atlanta Fed President Raphael Bostic, speaking at an event hosted by the Cobb Chamber of Commerce in Atlanta, stated that the Fed can afford to be patient as the current interest rates are clearly at a restrictive level:

We continue to see signs of economic slowdown, which tells me that the restrictive measures are taking effect.

The performance of the US economy is "incredible" in terms of resilience, but the inflation rate remains high. The Federal Reserve is confident in its ability to contain inflation and ensure that the inflation rate falls back to the target level of 2%.

Previously, on June 29th, Bosstick also stated that the current rate hike has been sufficient to push inflation down:

"Our nominal interest rates are already so high that they should be sufficient to push the inflation rate towards the 2% target within an acceptable timeframe. Data, survey results, and frontline experience all indicate that the US will gradually fall into deflation... I believe that even if the Federal Reserve does not raise the federal funds rate, deflation will still occur."

July 11th, Tuesday

06:00 AM - US June NFIB Small Business Optimism Index (Expected: 89.9, Previous: 89.4)

July 12th, Wednesday

08:30 AM - June CPI (MoM) (Consensus: +0.3%, Previous: +0.1%);

June Core CPI (MoM) (Consensus: +0.3%, Previous: +0.4%);

June CPI (YoY) (Consensus: +3.1%, Previous: +4.0%);

June Core CPI (YoY) (Consensus: +5.0%, Previous: +5.3%)

Goldman Sachs expects that June Core CPI (MoM) will increase by 0.22%, with the annual rate falling to 4.9%.

Goldman Sachs believes that the decline in car prices (used car prices MoM: -1.2%, new car prices MoM: -0.2%), as well as a slowdown in travel and housing expenditures, will ultimately lead to a decrease in the CPI growth rate.

The bank expects overall CPI to rise by 0.25% in June, reflecting increases in food (+0.2%) and energy (+0.7%) prices.

08:30 AM - Richmond Fed President Barkin (non-FOMC voter) speech:

Richmond Fed President Tom Barkin will discuss inflation issues at a local chamber of commerce. There is expected to be a Q&A session.

On June 16th, Barkin stated:

"I want to reiterate that a 2% inflation rate is our target, and I still hope that a slowdown in demand will quickly bring inflation back to this target. If future data suggests that this is difficult to achieve, the Federal Reserve can take further measures. I recognize that this will bring significant risks of economic slowdown, but the experience of the 1970s provides a clear lesson: if rate hikes are stopped too early, inflation will return more forcefully, requiring the Federal Reserve to do more and causing greater damage. This is not a risk I am willing to take."

09:45 AM - Minneapolis Fed President Kashkari (FOMC voter) speech:

Minneapolis Fed President Neel Kashkari will participate in a panel discussion on banking solvency and monetary policy at the NBER Summer Institute. On May 22, Kashkari said:

"Will we raise interest rates again in July? It's possible. The most important thing is that we haven't ruled out the option of raising rates. The market seems very optimistic about rate cuts right now. They believe that inflation will decrease, and then the Fed will react to it. I hope they're right. But no one should question our commitment to bringing the inflation rate down to 2%."

At 1:00 PM, Atlanta Fed President Bostic (non-FOMC voter) delivered a speech:

Atlanta Fed President Raphael Bostic will participate in a discussion on financial inclusion at the bank's 2023 Inclusive Payments Forum. A Q&A session is expected.

At 2:00 PM, the Fed released the Beige Book.

The Fed's Beige Book is a regional economic outlook jointly published by the 12 regional Federal Reserve Banks. The Beige Book for June, during the FOMC meeting, indicated that overall economic activity changed little in April and early May. Consumer spending in most regions remained stable or increased, and although expectations for economic growth slightly deteriorated, the majority of the market expects further expansion of economic activity.

Goldman Sachs pointed out that the focus of this month's Beige Book is on the impact of banking system stress on loans, growth, and sentiment, as well as the Fed's related comments on labor market tightness and the evolution of inflation pressures.

At 2:00 PM, the Senate Banking Committee discussed Fed nominations:

The Senate Banking Committee held a meeting on the nominations of Fed Vice Chair Philip Jefferson, Director Lisa Cook, and Director Adriana Kugler.

At 4:00 PM, Cleveland Fed President Mester (non-FOMC voter) delivered a speech:

Cleveland Fed President Loretta Mester will discuss FedNow at the NBER Summer Institute. The speech is expected to be published, followed by a Q&A session.

July 13, Thursday

8:30 AM, June PPI Final Value (Consensus: +0.2%, Previous: -0.3%);

June PPI excluding Food and Energy (Consensus: +0.2%, Previous: +0.2%);

June PPI excluding Food, Energy, and Trade (Consensus: +0.1%, Previous: unchanged).

8:30 AM, Initial Jobless Claims for the week ending July 8 (Consensus: 250,000, Previous: 248,000);

Continuing Jobless Claims for the week ending July 1 (Consensus: 1,720,000, Previous: 1,720,000).

At 6:45 PM, Fed Governor Waller delivered a speech:

Fed Governor Christopher Waller will speak on the economic outlook at an event hosted by the Money Marketeers. The speech is expected to be published, followed by a Q&A session. On June 16th, Waller stated:

"We have seen some impact of the policy rate on certain sectors of the economy. The labor market remains strong, but core inflation has remained subdued, which may require further tightening policies to lower inflation... I do not support changing the monetary policy stance due to concerns about a few poorly managed banks."

On July 14th, Friday

08:30 AM: Import Price Index for June (Consensus: -0.1%, Previous: -0.6%); Export Price Index for June (Consensus: unchanged, Previous: -1.9%)

10:00 AM: University of Michigan Consumer Sentiment Index for July (Consensus: 65.5, Previous: 64.4);

University of Michigan 5-10 Year Inflation Expectations for July (Consensus: 3.0%, Previous: 3.0%)

Goldman Sachs expects the University of Michigan Consumer Sentiment Index to rise by 0.6 percentage points to 65.0, while long-term inflation expectations are expected to remain unchanged, reflecting stable gasoline prices and reduced uncertainty related to banking sector pressures.

In addition, this Friday marks the beginning of the earnings season for US stocks, with JPMorgan Chase, Citigroup, and BlackRock being the first major companies to report their second-quarter results.