Equity and bond markets rallied last week after inflation data came in better than expected. The Core Consumer Price Index (CPI) monthly print of 0.2% registered the lowest reading since August of 2021.1 Continued progress on the core inflation front should allow the Federal Reserve (Fed) to be more patient with additional rate hikes following a widely expected quarter point hike at next week’s July Fed meeting.2
Regional bank earnings will be in focus this week after generally positive results were reported last week for the larger money center banks.3 The potential margin pressures for regional banks forced to pay higher interest rates to maintain deposits will be closely watched by investors. Fears that more stress emerges in the banking system continue to weigh on regional bank stock valuations.
Economic data this week is highlighted by U.S. retail sales and industrial production due to be released on Tuesday, housing starts on Wednesday and existing home sales information coming out Thursday.4
Sources:
1U.S. Bureau of Labor Statistics – Consumer Price Index News Release; 7/12/2023
2Board of Governors of the Federal Reserve System – Meeting calendars, statements, and minutes; as of 7/17/2023
3Reuters – US banking giants to report higher profits even as dealmaking drags; 7/11/2023
4MarketWatch – U.S. Economic Calendar; as of 7/17/2023
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