Macro outlook for next week: CPI and "horror data" may subvert interest rate cut expectations, and the Fed turns to a cautious stance
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Reprinted from panewslab
01/11/2025·1MPANews reported on January 11 that this week has been full of events. The first non-farm payrolls report at the beginning of the year far exceeded expectations, triggering severe market fluctuations. The report showed that the United States added 256,000 jobs in December last year, much higher than the 165,000 expected. Employment numbers for the past two months have been revised down by 8,000 jobs. The unemployment rate fell to 4.1% from 4.2%, while the unemployment rate is expected to remain at 4.2% or possibly rise to 4.3%. Wages increased by 0.3% month-on-month, and year-on-year wage growth slowed from 4% to 3.9%. The data led to a sell-off in U.S. stocks, with the S&P 500 falling to a one-week low after a strong non-farm payrolls report sparked new worries about inflation and raised hopes the Federal Reserve will be more cautious in cutting interest rates this year. Bank of America has said that they currently do not expect the Federal Reserve to cut interest rates in 2025. Next week, the United States will release a number of blockbuster data, including PPI, CPI and "terror data", which will continue to bring volatility to the market. Here are the key points that the market will focus on in the new week:
At 00:00 on Tuesday, the New York Fed’s 1-year inflation expectations for December;
Tuesday at 21:30, US December PPI data;
At 23:00 on Tuesday, 2025 FOMC voting committee member and Kansas Fed Chairman Schmid delivered a speech;
At 04:00 on Wednesday, FOMC permanent voting member and New York Fed President Williams delivered an opening speech at an event;
At 21:00 on Wednesday, Barkin, the 2027 FOMC voting committee member and Chairman of the Federal Reserve Bank of Richmond, delivered a speech;
Wednesday 21:30, US December CPI data, US January New York Fed manufacturing index;
At 23:00 on Wednesday, 2026 FOMC voting member and Minneapolis Fed President Neel Kashkari delivered a welcome speech and participated in a fireside chat at the online regional economic conference hosted by the Minneapolis Fed;
At 00:00 on Thursday, FOMC permanent voting committee member and New York Fed President Williams delivered a speech;
At 01:00 on Thursday, 2025 FOMC voting committee and Chicago Fed President Goolsby delivered a speech;
At 03:00 on Thursday, the Federal Reserve releases the Beige Book of Economic Conditions;
At 21:30 on Thursday, the number of initial jobless claims in the United States for the week to January 11 and the monthly rate of retail sales in December.
As the Fed shifts to a more cautious stance, there were some encouraging signs in November's CPI report that price increases in housing and broader services categories, which are the largest contributors to inflationary stickiness, have begun to ease. . That leaves the possibility of a downside surprise in the CPI data due to be released next Wednesday, but any slowdown is more likely to occur in the first few months of 2025 than last December's CPI data. Before the CPI data is released, investors will focus on the U.S. PPI data for December last year, which is scheduled to be released next Tuesday. On Thursday, all the market's eyes will be focused on the retail sales data, which is known as "horror data."