On Wednesday, at his presser, Fed Chair Jerome Powell sounded more dovish. So bond and stock prices continued to rally on expectations that the Fed might cut the federal funds rate three times in 2024 by 75bps in total. On Friday, NY Fed President John Williams pushed back by saying, "We aren't really talking about rate cuts right now." More Fed officials will weigh in on this issue over the rest of the month.
The data out this week should confirm that we are in an economic soft-landing, which is the scenario that Fed officials seem to be thinking is increasingly likely. November's PCED (Fri) should indicate that inflation is moderating as shown by the month's CPI and PPI inflation rates:
November's Index of Coincident Economic Indicators (Thu) probably rose to yet another record high, once again defying the recession forecast of the Index of Leading Economic Indicators, which has been falling since the start of 2022.
We expect to see signs that housing's rolling recession is turning into a rolling recovery in response to falling mortgage rates. November's housing starts (Tue) should show an increase led by single-family starts (chart). The recent weakness in multi-family starts over the past few months may confirm that there might be plenty of new rental units as suggested by falling market rent inflation. November's existing (Wed) and new (Fri) home sales should also indicate that housing has bottomed.
