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January inflation and February manufacturing data ahead later this week
US equity futures are pointing to a muted, but higher open. Because we have no market-moving economic data or earnings from companies that constitute a significant portion of any major market index, equity markets are in a holding pattern today. This won’t last long given tomorrow’s second look at 4Q 2023 GDP, Thursday’s January PCE Price Index data, and the rush of February Manufacturing PMI data on Friday. Taken together those pieces of data could either reaffirm or reshape expectations for the economy, potentially impacting rate cut expectations by the Fed.
Based on the February Flash PMI data from S&P Global (SPGI) and the preponderance of January inflation data that pushed against the softening narrative, this week’s coming data could push rate cut expectations into 2H 2024. So far, the surprising resilience of the US economy has allowed investors to feel comfortable shrugging off those concerns, however, if upcoming data suggests a different picture is on the horizon we could see investors selling into the gains generated since the market’s late October rally.
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