Markets are largely in a holding pattern ahead of the FOMC decision.
Today’s retail sales report was softer than expected but it came after an extremely strong reading the month before so it’s tough to say consumers are truly retrenching. There’s also the mystery about how consumers will cope with the ongoing delta wave in several states and the coming omicron wave.
The bigger questions are around inflation and how the Fed will react to higher prices and building pressure on wages. On that front, there were some signs of a peak in the latest Empire Fed manufacturing index but that will take awhile to filter through to the hard inflation data. But wouldn’t it be poetic if inflation pressures peaked just as the Fed hit the panic button?
The US dollar is modestly softer on the day but unchanged since the retail sales report. S&P 500 futures are also trading unchanged.
So we start counting the hours until the Fed decision. Here are some predictions from Janney’s Guy LeBas:
Read More: FX market little changed after US retail sales as we await the Fed