3 Economic Events That Could Affect Your Portfolio This Week, July 10-14, 2023

The main investor focus this week will be the start of the Q2 2023 earnings season, as the big U.S. banks begin reporting this coming Friday. However, this week will also feature several very important economic reports, with the most influential of them being the CPI report, which will come out on Wednesday. The weaker-than-expected jobs report last week failed to dissipate the markets’ projections of another interest-rate hike at the Federal Reserve’s July rates meeting; now all eyes are on inflation data which is expected to have a large influence on the policymakers’ decisions.

Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.

» June’s Consumer Price Index (CPI) and CPI Ex Food & Energy – Wednesday, 7/12 – the CPI report, released by the US Bureau of Labor Statistics, is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. Since the U.S. Federal Reserve has a dual mandate of maintaining price stability and maximum employment, the CPI numbers are immensely important in shaping their policies. Although the headline inflation peaked a year ago, it remains way above the Fed’s target of annual 2%. In June, the annual headline CPI is expected to have decelerated further from May’s 4% pace, falling to 3.2%. However, on a monthly basis, the June CPI is forecast to show a rise of 0.4%, up from 0.1% in May, underscoring the difficulty in bringing stubborn inflation back to the target. Moreover, the CPI ex. Food and Energy, or Core CPI, has been even slower to come down than the headline number, reflecting still-strong price pressures in the economy. The Core CPI is expected to have declined in June to an annual pace of 5.1% from May’s 5.3%. The expected numbers are sufficient to support the Fed’s July rate hike; if they come in lower than forecast it may help soften the central bank’s stance.  

» June’s Producer Price Index (PPI) – Thursday, 7/13 – the report measures the average changes in prices in primary markets of the U.S. by producers of commodities in all states of processing. Since PPI measures the costs of producing consumer goods, which directly affects retail pricing, PPI is seen as a good pre-indicator of inflationary pressures, i.e., a leading indicator for the next months’ CPI. Therefore, the PPI serves the policymakers in shaping their overall inflation outlook, which directly influences their interest rate path. Producer prices are projected to have risen 0.2% in June from May’s decline of 0.3%. On an annual basis, analysts expect that the PPI has increased by just 0.4% versus May’s 1.1% rate. Producer prices have been decelerating sharply in recent months, depressed by a strong decline in commodities prices. If the trend continues as expected, it will support the view that consumer inflation will continue coming down, as well.   

» July’s Michigan Consumer Sentiment Index (preliminary)– Friday, 7/14 – the report, released by the University of Michigan, is a survey of personal consumer confidence in economic activity. According to research, up to a quarter of variations in GDP can be attributed to changes in consumer sentiment, since the report forecasts changes in household consumer spending, accounting for approximately 70% of the economy. Consumer sentiment improved strongly in June, although remaining at historically low levels. July’s report is expected to show a further increase to 65.8 (from June’s 64.4). The policymakers closely monitor consumer attitudes, as consumer exuberance can translate into greater spending and faster inflation.