The Week Ahead: Money decision, Yellen, prices, retail, industry, witches

The Federal Open Market Committee completes a two-day meeting on Wednesday with an announcement and forecasts at 2 p.m. New York time and a news conference with Fed Chair Janet Yellen at 2:30 p.m.

Yellen’s term ends Feb. 3, when she will be replaced by the present Fed Gov. Jerome Powell. The FOMC last raised its target federal funds rate on June 15, by 25 basis points to the $1.00 to $1.25 range. So far there have been four increases in the post-recession period, beginning Dec. 17, 2015 from the recession low of $0.00 to $0.25.

The morning before Wednesday’s FOMC announcement, the latest consumer price index numbers will be published at 8:30 a.m. Another set of price statistics, the producer price index final demand report, will be released on Tuesday at 8:30 a.m.

Two other high-visibility reports hit the Street’s consciousness during the week: Retail sales on Thursday at 8:30 a.m. and industrial production on Friday at 10:15 a.m.

Friday is a quadruple witching day in the markets, when stock options, stock market index futures and options, and single-stock futures all expire together, between 3 p.m. and 4 p.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment, from the jobless claims report at 8:30 a.m. Thursday.

Events arranged by day:

Monday: Job opening and labor turnover survey at 10 a.m.

Tuesday: FOMC meeting beginsproducer price index final demand at 8:30 a.m. and the Treasury budget at 2 p.m.

Wednesday:  The consumer price index at 8:30 a.m., petroleum inventories at 10:30 a.m., the FOMC announcement and forecasts at 2 p.m., Fed Chair Yellen news conference at 2:30 p.m.  and opening remarks by Fed Gov. Lael Brainard at an awards ceremony for the Workforce Development Video Campaign at 6 p.m.

Thursday: Jobless claimsretail sales and import and export prices, each at 8:30 a.m., business inventories at 10 a.m. and the M2 money supply at 4:30 p.m.

Friday: The Empire State manufacturing survey of conditions in New York at 8:30 a.m., quadruple witching hour at 3 p.m. and the Treasury international capital report tracking flows between the U.S. and abroad at 4 p.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate which is the difference between the yields on 5-year U.S. Treasury notes and  5-year Treasury inflation protected securities (TIPS).

By Tim Bovee, Portland, Oregon, Dec. 8, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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