With Monday’s Labor Day holiday behind us in the United States, the markets move from summer holidays to the serious business of autumn: Divining the minds on the Federal Open Market Committee by analyzing the strength of the economy.

As is often the case in finance, the question comes down to one of simple math: How quickly with the Fed raise interest rates? And will it be faster than before or slower?

A key measure of the economy’s strength, the employment situation report, will be published on Friday at 8:30 a.m. New York time. The trailing indicator will get a sneak preview on Thursday in the form of the ADP employment report, issued at 8:15 a.m. by a private payroll management company.

Other heavily watched reports out during the week: The Institute of Supply Management manufacturing index on Tuesday at 10 a.m. and international trade on Thursday at 8:30 a.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.

Vendor performance, or the deliveries times index, from the Institute of Supply Management manufacturing survey, at 10 a.m. Tuesday.

The average hourly workweek in manufacturing from the employment report at 8:30 a.m. Friday.

Manufacturers’ new orders for consumer goods and materials from the factory orders report at 10 a.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.

Manufacturers’ new orders for non-defense capital goods from the factory orders report at 10 a.m. Thursday.

Events arranged by day:

Monday: U.S. markets closed for Labor Day.

Tuesday: The Purchasing Managers Institute manufacturing index at 9:45 a.m., and the Institute of Supply Management manufacturing index and construction spending at 10 a.m.

Wednesday: Motor vehicle sales throughout the day and international trade at 8:30 a.m.

Thursday: The ADP employment report at 8:15 a.m.,, jobless claims and productivity and costs, each at 8:30 a.m., factory orders and the Institute of Supply Management non-manufacturing survey, each  at 10 a.m., petroleum inventories at 11 a.m and the M2 money supply at 4:30 p.m.

Friday: The employment situation and at 8:30 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 10-year implied inflation rate which is the difference between the yields on 10-year U.S. Treasury notes and  10-year Treasury inflation protected securities (TIPS).

By Tim Bovee, Portland, Oregon, Sept. 1, 2018

Disclaimer

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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