Markets and Economy: A Week of Inflation Data
The past week saw a decline in markets following the release of the US jobs report, which indicated a slowdown in the labor market. Meanwhile, crypto assets have remained range-bound over the weekend, awaiting the release of key inflation data this week.
Economic Events: September 8 to 12
This week is packed with crucial economic events that will provide insights into the current state of the economy. The Federal Reserve has two primary mandates: maximum employment and stable prices. With the employment mandate already showing signs of slowing down, investors are eagerly awaiting data on the second mandate, which pertains to price stability.
Key Inflation Data
The August Producer Price Index (PPI) report will be released on Wednesday, providing valuable information on input costs for producers and manufacturers. This report is a leading indicator of inflation and is closely watched by investors and analysts. On Thursday, the August Consumer Price Index (CPI) will be released, which is one of the central bank’s key measures of inflation. The CPI report reflects price trends across the economy and has a direct impact on consumer spending and sentiment.
Consumer Sentiment and Inflation Expectations
Friday will see the release of the September Michigan Consumer Sentiment Index and Consumer Inflation Expectations preliminary readings. These reports summarize consumer confidence and long-term inflation expectations, which have a significant impact on retail spending. Despite US President Donald Trump’s claims that there is no inflation, consumers are likely to disagree, and this week’s figures could be influential, especially since CPI has been increasing over the past few months due to tariffs.
Key Events This Week
The following events are scheduled to take place this week:
- 12-Month BLS Data Revision – Tuesday
- August PPI Inflation data – Wednesday
- OPEC Monthly Report – Thursday
- August CPI Inflation data – Thursday
- MI Consumer Sentiment data – Friday
- MI Inflation Expectations data – Friday
Recession Signal
The Kobeissi Letter has identified a key recession signal, which is "flashing red." US construction spending fell by 2.8% in July, one of the biggest drops since the 2008 Financial Crisis, and the sixth consecutive monthly decline. This decline is a significant indicator of a potential recession.
Crypto Market Outlook
Rising inflation is not good for risk-on assets such as crypto, as retail investors will be tightening their belts. Despite this, the crypto market remained flat over the weekend, with a minor uptick during Asian trading on Monday morning. The total capitalization of the crypto market reached $3.91 trillion.
Crypto Assets
Bitcoin has been tightly range-bound over the past few days and moved to the top of that range at just over $111,000 on Monday morning. Ethereum has oscillated around the $4,300 price range, where it was still trading at the time of writing. The altcoins had a better day, with more green than red and larger gains for XRP, Solana, Dogecoin, and Hyperliquid.
Conclusion
This week is crucial for the economy, with key inflation data set to be released. The crypto market will be closely watching these events, as rising inflation could have a significant impact on risk-on assets such as crypto. As the Federal Reserve prepares for its pivotal meeting in 10 days, investors will be eagerly awaiting the release of the inflation data to gauge the current state of the economy and make informed decisions about their investments.
