Retail sales, jobless claims, producer prices, and a second day of testimony from the Fed Chairman. Let's see if the market can price in QE3 for the third time in a row on all the same data.
8:30: Producer Price Index (June): Weaker headline. Goldman forecasts a 0.5% decline in the June PPI due to weakness in energy prices. Excluding food and energy, however, it sees a firm 0.3% gain in the core. This increase would take the year-on-year core rate to 2.3%, the highest since August 2009.
On headline, GS: -0.5%; median forecast (of 74): -0.2%; last +0.2%.
On core, GS: +0.3%; median forecast (of 69): +0.2%, last +0.2%.
8:30: Retail sales (June): Better core. Monthly retail sales likely fell in June, partly for bad reasons (lower vehicle sales) and partly for good ones (lower gasoline prices that reduced fuel expenditures). But excluding these components, retail activity probably posted a healthy month-on-month gain. The consensus forecast for sales ex-autos and gas is a solid +0.4%.
On total sales, GS: -0.5%; median forecast (of 79): -0.1%; last: -0.2%;
On sales ex autos, GS: -0.1%; median forecast (of 72): flat; last +0.3%.
8:30: Jobless claims (Week of July 9): Auto sector issues. For a few weeks each year, automakers in the US temporarily shutdown as they retool plants for the new model-year vehicles. The shutdowns are anticipated by the seasonal adjustment factors used in the initial claims statistics. Therefore, to the extent that the shutdown pattern matches a typical year it has no impact on seasonally adjusted jobless claims. This year, some have argued that seasonally adjusted claims are likely to decline sharply because automakers retooled during parts-related shutdowns in April and May. If correct that would occur in this week’s report—when the seasonal adjustment factors expected shutdowns to occur. However, based on weekly auto production data, we find only limited evidence to support the claim of early retooling. For the industry as a whole, vehicle production declined sharply last week in line with normal seasonal variation. Goldman believes seasonal adjustment issues in the auto sector are only a small source of downside risk in today’s claims report.
Median forecast (of 47): 415,000; last: 418,000.
10:00: Federal Reserve Chairman Ben Bernanke delivers his second day of testimony for the semi-annual monetary policy report to Congress.
10:00: Business inventories (May). Not a market mover, but the non-auto retail inventory component could have an impact on our “bean-count” estimate of Q2 GDP.
Median forecast (of 48): +0.8%; last +0.8%.
11:00: Treasury will announce a 3- and 6-month bills and a new 10-year TIPS.
13:00: $13 billion in 30 Year bonds completes this week's Treasury issuance
From GS, ZH