The Week Ahead: Housing, and my favorite Fed report


Housing dominates a week largely devoid of other major economic reporting. Housing starts, a leading indicator, will be published Wednesday at 8:30 a.m. New York time, and existing home sales — the larger part of the market — on Thursday at 10 a.m.

A third housing report, generally thought of as being of lesser importance, is the housing market index, produced by the National Association of Home Builders. It will be released on Tuesday at 10 a.m.

My favorite Federal Reserve report, the quarterly Financial Accounts of the United States (Z.1), will be published on Thursday at noon. It has no market impact to speak of, but for a broader view it is nonpareil. The report lists the assets and liabilities of the U.S. economy — private sector and public sector. I find it be more exciting reading than my other big-picture standbys: The monthly Gross Domestic Product report from the U.S. Bureau of Economic Analysis and the Beige Book, published eight times a year by the Federal Reserve.

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.

Building permits for new private homes from housing starts, at 8:30 a.m. Wednesday.

The leading indicators report is in itself not a leading indicator. Instead, it aggregates the leaders in order to pinpoint where the U.S. economy stands in its economic cycle. It will be published at 10 a.m. Thursday.

Events arranged by day:

Monday: The Empire State manufacturing survey of conditions in New York at 8:30 a.m.

Tuesday:  The Home Builders housing market index at 10 a.m. and the U.S. Treasury international capital report at 4 p.m.

Wednesday: Housing starts at 10 a.m.. and  petroleum inventories at 10:30 a.m.

Thursday: Jobless claims and the Philadelphia Federal Reserve Bank business outlook survey of conditions in the mid-Atlantic region, each at 8:30 a.m., existing home sales and leading indicators, each at 10 a.m., the Z.1 – Financial Accounts of the United States report at 12 noon, and the Federal Reserve balance sheet and the M2 money supply, each at 4:30 p.m.

Friday: quadruple witching day in the markets, as  market index and stock futures and options all expire on the same day, producing highter volumes in the last hour of trading.

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. 15, 2018


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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