The Week Ahead: Federal Reserve, producer prices

The Federal Open Market Committee meets beginning Wednesday to make a another decision about interest rates. The meeting concludes on Thursday at 2 p.m. New York time with an announcement of the decision. No news conference is scheduled.

The Fed raised rates once each in 2015 and 2016, three times in 2017 and so far, three times in 2018.

Today’s Book

Can American Capitalism Survive?

Why Greed Is Not Good, Opportunity Is Not Equal, and Fairness Won’t Make Us Poor

by Steven Pearlstein

Washington Post business columnist Steven Pearlstein takes on what I consider to be the challenge of our age: Can capitalism provide a better life for us all?

Now more than ever people are questioning the vast theory and system that underlies our lives, amid increasing inequality and the resulting political turmoil.

Pealstein gives a view of what has happened, why it has happened, and what specifically must be done to fix it. and, in the process, preserve the dynamic system that has created a world of increasing wealth and freedom.

More about the book

There has not yet been a November increase since the present series began, so I won’t read much into it if the Fed decides not to raise at this meeting. The final meeting of the year, Dec. 18-19, will have a news conference by the Federal Reserve chair and release of new forecasts, and that would be the most likely time to announce a fourth increase for the year.

A decision to raise in November, on the other hand, would be a very big deal, with a market response and without a doubt a very loud response from the White House.

One report on the state of prices is due out during the week. The producer price index (final demand) will be published on Friday at 8:30 a.m.

Fed Vice Chairman for Supervision Randal Quarles will speak on future financial regulation at the Brookings Institution in Washington on Friday at 9:05 a.m. The event will be steamed live here.

The week ends with a three-day weekend marking the Veterans Day holiday in the United Stats on Monday, Nov. 12.

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.

The index of consumer expectations from the University of Michigan consumer sentiment survey at 10 a.m. Friday.

Events arranged by day:

Monday: The Institute of Supply Management non-manufacturing index at 10 a.m.

Tuesday: The job openings and labor turnover survey at 10 a.m.

Wednesday: Petroleum inventories at 10:30 a.m.

Thursday: Jobless claims at 8:30 a.m., the FOMC meeting announcement at 2 p.m., and the Federal Reserve balance sheet and the M2 money supply at 4:30 p.m.

Friday: Producer price index-final demand at 8:30 a.m., Fed Vice Chairman Quarles speech at 9:05 a.m. and the University of Michigan consumer sentiment survey at 10 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, Nov. 3, 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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