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Calendar Planning: January 25
Hello members! We hope your weekend is going well. We’re hoping to help get your game-planning on track by taking a few minutes to look at the week ahead review last weeks calendar and look forward to next week.
Summary of Last Week’s Economic Data (January 20–27, 2025):
The data from last week reflects a mixed but generally softening economic environment, aligning with expectations of a slowing economy and cooling inflation. Here’s a breakdown of the key takeaways:
1. Labor Market: Signs of Cooling
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Initial Jobless Claims (Jan/18): Rose to 223K (vs. est. 220K and prev. 217K), indicating a slight uptick in layoffs.
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Continuing Jobless Claims (Jan/11): Increased to 1,899K (vs. est. 1,860K and prev. 1,853K), suggesting that unemployed workers are taking longer to find new jobs.
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Jobless Claims 4-Week Average (Jan/18): Inched up to 213.5K (vs. prev. 212.75K), showing a gradual rise in unemployment trends.
Implication: The labor market is showing early signs of softening, which aligns with the Federal Reserve’s goal of cooling the economy to curb inflation. However, the labor market remains relatively resilient overall.
2. Housing Market: Mixed Signals
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Existing Home Sales (Dec): Rose to 4.24M (vs. est. 4.19M and prev. 4.15M), a positive sign for housing demand.
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Existing Home Sales MoM (Dec): Increased by 2.2% (vs. est. 0.3% and prev. 4.8%), though the pace of growth slowed compared to the previous month.
Implication: The housing market is showing some strength, but the slower month-over-month growth suggests that higher mortgage rates may still be weighing on buyers.
3. Consumer Sentiment: Declining Confidence
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Michigan Consumer Sentiment (Jan): Fell to 71.1 (vs. est. 73.2 and prev. 74.0), reflecting weaker consumer confidence.
Implication: Consumers are becoming more cautious, likely due to economic uncertainty and persistent inflation concerns. This could lead to slower consumer spending in the coming months.
4. Manufacturing and Services: Contraction in Manufacturing, Slowing Services
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S&P Global Manufacturing PMI (Jan): Improved slightly to 50.1 (vs. est. 49.7 and prev. 49.4), barely crossing into expansion territory.
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S&P Global Services PMI (Jan): Fell sharply to 52.8 (vs. est. 56.5 and prev. 56.8), indicating a significant slowdown in the services sector.
Implication: The manufacturing sector is stabilizing but remains weak, while the services sector is losing momentum. This aligns with the narrative of a slowing economy.
5. Inflation and Spending: Mixed Signals
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Core PCE Price Index (Dec): Data for December is not yet available, but the focus will be on whether inflation continues to cool.
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Personal Spending MoM (Dec): Expected to remain steady at 0.4%, indicating that consumer spending is holding up but not accelerating.
Implication: Inflation remains a key focus. If Core PCE shows further moderation, it will support the case for lower interest rates.
What to Watch for Next Week (January 27–31, 2025):
Next week’s data will provide further clarity on the trajectory of the economy, inflation, and the Federal Reserve’s policy path. Key events include:
1. Durable Goods Orders (Tuesday, January 28)
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Expectation: Durable goods orders are expected to rebound, with headline orders rising 0.8% MoM (vs. prev. -1.1%) and ex-transportation orders increasing 0.4% MoM (vs. prev. -0.1%).
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What to Watch: A stronger-than-expected reading could signal resilience in business investment, while a miss would reinforce the narrative of slowing economic activity.
2. Fed Interest Rate Decision (Wednesday, January 29)
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Expectation: The Fed is widely expected to hold rates steady at 4.5%, but the focus will be on the tone of the statement and Chair Powell’s press conference.
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What to Watch: Any hints of rate cuts in 2025 or concerns about slowing growth will be closely scrutinized. Markets are looking for confirmation that the Fed is done hiking and may pivot to easing later in the year.
3. GDP Growth Rate (Q4, Thursday, January 30)
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Expectation: GDP growth is expected to slow to 2.7% QoQ (vs. Q3’s 3.1%), reflecting a moderation in economic activity.
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What to Watch: A larger-than-expected slowdown could increase concerns about a potential recession, while a stronger reading would suggest the economy remains resilient.
4. Core PCE Price Index (Friday, January 31)
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Expectation: Core PCE inflation is expected to rise 0.2% MoM and 2.8% YoY, in line with previous readings.
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What to Watch: Any downside surprise in Core PCE would bolster the case for rate cuts, as it would signal that inflation is cooling faster than anticipated.
5. Jobless Claims (Thursday, January 30)
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Expectation: Initial jobless claims are expected to rise slightly to 225K (vs. prev. 223K), while continuing claims are expected to dip to 1,885K (vs. prev. 1,899K).
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What to Watch: Further increases in jobless claims would reinforce the narrative of a softening labor market, which could prompt the Fed to consider rate cuts sooner.
Key Themes for Next Week:
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Slowing Growth: Look for confirmation of a moderating economy in GDP, PMI, and jobless claims data.
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Cooling Inflation: Core PCE will be critical in assessing whether inflation is on track to reach the Fed’s 2% target.
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Fed Policy: The Fed’s tone and guidance will be pivotal in shaping market expectations for rate cuts in 2025.
Conclusion:
Last week’s data painted a picture of a gradually slowing economy, with softening labor market conditions, declining consumer sentiment, and mixed signals from the housing and manufacturing sectors. Next week’s data, particularly the Fed decision, GDP, and Core PCE, will be crucial in determining whether the economy is on track for a “soft landing” or if further weakness is ahead. Markets will be looking for signs that inflation is cooling sufficiently to allow the Fed to pivot to rate cuts in 2025.
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
This post goes out as an email to our subscribers every day and is posted for free here around 2 PM ET. To get your real-time copy, sign up for the free or premium version here: Opening Print Subscribe.
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