How will this week’s consumption indicators impact debt securities?

How will this week’s consumption indicators impact debt securities? (Part 1 of 8)

How will this week’s consumption indicators impact debt securities?

The upcoming FOMC

This week, markets will be looking at any clues revealing hints for the outcome of the Fed’s next Federal Open Market Committee Meeting (or FOMC) slated for March 18–19. There are two important speeches scheduled for this week that may have an impact on the outcome of next week’s meeting—Philadelphia Federal Reserve Bank President Charles Plosser’s speech on monetary policy, banks, and protectionism in Paris and Chicago Fed President Charles Evans’ speech on the economy and monetary policy in Columbus, Georgia. Both are scheduled for Monday, March 10.

Part 1Enlarge Graph

Apart from these speeches, there are a number of consumer-centric indicators due for release this week: the National Federation of Independent Business (or NFIB) will release the Small Business Optimism Index on Tuesday, March 13. The report on Wholesale Trade will be released by the U.S. Census Bureau on the same day. The Bureau will also release its retail sales estimates and manufacturing and trade inventories and sales report for February on Thursday, March 13.

Other consumer-related indicators include the Mortgage Bankers Association Purchase Applications Index, to be released on Wednesday, and the Reuter’s/University of Michigan’s consumer sentiment index, to be released on Friday. As consumption accounts for about two-thirds of the economy, these consumer-centric indicators are expected to provide significant clues as to the direction the economy is headed in. General macro-level trends in consumption increases or decreases may impact companies in the retail and personal care space like Target (TGT) and Proctor & Gamble (PG) as well as bond ETFs like TLT, BND, and AGG.

On Wednesday, March 12, the U.S. Treasury Department will release its monthly budget statement for February. The surplus or deficit will have important consequences for future issues of Treasury securities. The week also includes auctions of Treasury securities and announcements for future auctions. We’ll be covering those in a separate series.

To read about employment indicators due to release next week and which would exert a significant impact on consumption, read on to Part 2 of this series.

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