Investors are eagerly, and nervously, looking forward to data reports due over the next few days amid worries that a hot economy could translate to tighter monetary policy
because it is seen as especially sensitive to labor costs, which interest-rate increases are designed to moderate.
Just a few weeks later, however, the situation looked substantially worse. Inflation in services outside of housing and energy, as defined by the Fed’s preferred personal-consumption expenditures price index, now appears to be running at a six-month annualized rate comfortably above 5%. Meanwhile, prices of goods excluding volatile food and energy categories also rebounded strongly in January after dropping in previous months.
Some of the economic readings in the coming days will likely be more important than others, analysts noted.A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.Data that shows continued strength in the labor market would worry investors, because it would point to underlying pressure on inflation. But it would also contain a measure of good news, signaling that a recession isn’t imminent.
Some investors, meanwhile, still believe that it will take time for rate increases to slow down the economy—an argument that would undercut the importance of more strong data in the coming days.
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