Quiet Data Week Puts Focus on Powell Saga

• It’s a light data week and with the Fed going quiet prior to their FOMC meeting next week we’ll be subjected to the whims of the White House and the saga of Powell’s status as Fed Chair. For now, markets are quiet with a slight risk-on tone to start the week. Dow futures are indicated higher by 100 points. Currently, the 10yr Treasury is yielding 4.37%, down 6bps on the day, while 2yr note yields are 3.85%, down 3bps in early trading.

 

• This is an uninspired week as far as new data goes so we’ll be subjected to the whims of the political kind, and in our world that is whether Fed Chair Powell will serve out the remaining term of his chairmanship.  We think so, but that’s not to stop Trump from advancing the name of his potential successor. While the two Kevins (Warsh and Hassett) have the inside track, Treasury Secretary Bessentt’s hat is in the ring along with our preferred candidate Fed Governor Christopher Waller.

 

• While we await the FOMC meeting next week, and the June employment numbers on the following Friday, we’ll have to be content with the likes of the Leading Index, housing data, Durable Goods Orders, and Initial Claims to get our data feeding this week.

 

• The only report due today will be June’s Leading Index at 10am ET with a -0.2% expectation vs. -0.1% in May. There’s probably not been a more maligned report during this post-pandemic cycle than the Leading Index. It’s been flashing recession for so long now the bulb is burned out. In any event, one day it will be right, but today will not be that day.

 

• Tomorrow will bring a series of regional Fed manufacturing activity reports (Philly and Richmond) while Wednesday will bring the latest existing home sales. Sales for June are expected to be 4.00 million annualized vs. 4.03 million in May as sales activity remains mired in mediocrity given steep valuations, and near 7% mortgage rates. Supply, however, is improving so hope springs eternal. New Home Sales for June will follow on Thursday with a slight increase in activity expected (650k annualized sales vs. 623k in May). While month-over-month improvement is encouraging, like the existing sales series, overall sales activity remains well below historical levels.

 

• Thursday also brings the weekly jobless claims series, and the trend lately has been for rather benign levels of initial claims (read low 200k range), but continuing claims have been trending higher and have been knocking on the door of 2 million claims as the low-hire, low-fire environment seems to be the path of least resistance for now.

 

• Preliminary Durable Goods Orders for June will complete the week’s offerings with a big drop of -10.5% expected due to soft aircraft sales. Ex-Transportation orders are expected to be down slightly -0.1% vs 0.5% in May. Orders non-defense, ex-air, the proxy for business spending, is expected to up 0.2% vs. 1.7% in May.

 

• The Fed goes into radio silence this week prior to the FOMC meeting, and while Powell is scheduled to speak at a regulatory conference tomorrow, given the quiet period we don’t think he’ll stray into monetary policy during his regulatory address.

 

• Last call! Kevin Smith and I will co-host a webinar tomorrow at 2pm ET to review our midyear economic outlook, 2^nd quarter investment portfolio performance, and strategies that will prosper in 2026.  Please consider registering to what we are sure will be an informative 30-minute discussion. The registration link can be found here. We would love to see you there, at least virtually!

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University of Michigan July Preliminary Consumer Sentiment – Modest ImprovementSource: Bloomberg

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Univ. of Michigan Preliminary July Inflation Projections – Improved from June’s Spike

 

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Univ. of Michigan Preliminary July Buying Conditions for Houses Remains Challenging

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Amazon Prime Day Buying – Mostly for Essentials