By Theresa Sheehan

PRINCETON (SMRA) – The week ahead is busy with data releases, and
many of them of high importance to markets. Foremost will probably be
retail trade and the Consumer Price Index, but also of interest will be
the manufacturing outlooks from the New York and Philadelphia Fed, and
the first takes on consumer confidence in September.

Fed officials will largely be out of sight during the traditional
news blackout period in advance of the September 21 FOMC meeting.
Governor Tarullo will deliver a speech at the Brookings Institution on
Friday, but that will be on financial regulation, not monetary policy.

The U.S. Congress will be back from the summer break. It is hoped
the Senate will vote on the two nominees for the Fed Board — San
Francisco Fed President Janet Yellen to move back to headquarters as
Governor and now Vice Chairman, and Sarah Bloom Raskin as governor. If
the vote does occur, then it is just possible that the Board will have
one or two new governors in time for the FOMC meeting.

The Reserve Bank of New Zealand will make its routine monetary
policy announcement late in the day on Wednesday (Thursday in New
Zealand). No change in rates is expected. In fact, major central banks
are generally on hold for policy right now, with a bias towards easing.

The retail trade report for August at 8:30 ET on Tuesday could be
slightly stronger than expected. Anecdotally sales were slower than
usual during the back-to-school shopping period and consumers were out
for bargains and focused on necessities. There may be some increases in
department and specialty store sales, and perhaps in electronics for
computers and other education related items. The gasoline price was
fairly stable over the month, and sales of motor vehicles were somewhat
slower. Weekly measures of retail activity for fiscal August were on the
slow side, but these tend to be lower than government numbers.

There are three inflation reports, of which the CPI at 8:30 ET on
Friday is the most important. It will be preceded by the PPI for August
at 8:30 ET on Thursday, and the Import Price Index for August at 8:30 ET
on Wednesday. In general, energy prices were little changed in August,
and food prices could have moved higher on a few components related to
grains, meats, and eggs. Outside of food and energy, there are probably
few price pressures higher.

The September manufacturing surveys from the New York and
Philadelphia Feds will be released on Wednesday at 8:30 ET and Thursday
at 10:00 ET, respectively. The District Bank surveys for the factory
sector softened considerably over the last two months. Markets will be
watching for any sign of strengthening, especially in the new orders and
employment components.

The Fed’s report on industrial production and capacity utilization
for August is at 9:15 ET on Thursday. Gains in manufacturing, mining,
and utilities should contribute to a mild rise for the month. Capacity
use is continuing to edge higher, but remains quite slack.

Consumer confidence wavered over the course of the summer. There
are signs that it has started to rise in September, but this is only
relative to fairly low readings for the major indexes. Nonetheless, any
indication that the consumer might be more willing to spend will be
welcomed. The IBD/TIPP Economic Optimism Index for September is at 10:00
ET on Tuesday, and the preliminary Reuters/University of Michigan
Consumer Sentiment Index is at 9:55 ET on Friday. The former tends to
signal the movement of the latter, but not perfectly.

Jobless claims for the week ended September 11 will include the
survey comparison week to August. Compared to the August 14 week when
claims recently peaked at 504,000, the decline is likely to be quite
steep.

Data on business inventories for July at 10:00 ET on Tuesday will
add the retail component to those already known for wholesale and
factory inventories. In turn, this will contribute to expectations for
third quarter GDP. After the release of the international trade data,
SMRA now expects about 3% growth, nearly twice that of the 1.6% in the
second quarter.

The Treasury International Capital System (TICS) data for July at
9:00 ET will provide a snapshot of foreign purchases of U.S. debt and
equities.

The Current Account Balance for the second quarter at 8:30 ET is
going to reflect the data already known from the international trade
report plus remittances abroad. The wider trade deficit means a wider
current account, but this may narrow again in the third quarter as the
deficit shrinks a bit.

The quarterly Flow of Funds report for the second quarter at 12:00
ET (noon) on Friday will have something to say about the growth in
domestic nonfinancial debt of households, businesses, and government.

There are no coupon auctions or announcements on the calendar for
next week. The new 3-year notes, and 10-year note and 30-year bond
reopenings will settle on Monday.

** Stone & McCarthy Research Associates **

[TOPICS: M$$FI$,M$U$$$,MAUDS$]