Given the large move in commodity prices this week and their impact on domestic and international markets, investors could put heavy emphasis on the commodities markets in the week ahead. If the commodity decline deepens, spillover effects into commodity-based countries could grow. To this end, watch the emerging markets and credit spreads in particular.
The retail sales report due out at the end of the week might get the most attention if the results are convincing enough in either direction.
Wednesday's weekly mortgage applications will also be important because declines posted at the end of December have been interpreted by some as indicating that the modest rebound in housing has faltered. Past behavior of the data series indicates that decreases in December are normal and that a sharp increase in early January is possible. If that occurs, the notion of a near-term bottoming in housing will gain traction.
Wednesday's trade deficit will help round up the final bits of data that analysts will use in devising their forecasts for fourth-quarter '06 GDP. The data are likely to show that trade is exerting a smaller drag on the economy thanks to the recent decline in energy prices.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog TIPS Suggest Bonds Not Source of Stock Drop 1/5/2007 3:10 PM EST Those who think Friday's jobs report has caused a meaningful change in inflation expectations should look more closely at the TIPS market.
Tony Crescenzi Blog Latest Rate-Cut Odds 1/5/2007 1:17 PM EST The strong jobs report reduces the chance of a rate cut at the Jan. 31 meeting to just 2%.
Tony Crescenzi Blog Natural Gas Draws Less Than Expected 1/5/2007 11:45 AM EST Here are some details from the weekly data release on natural gas inventories.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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