US: Time for retail sales, producer prices and Yellen – BBH

Research Team at BBH, suggests that after a poor August, Americans are believed to have gone shopping again in September. 

Key Quotes

“The headline may be flattered by stronger auto sales and higher gasoline prices.  The key, however, is the GDP measure which excludes those two items and others goods, like building materials.  After falling for two months, it is expected to rise around 0.4%. 

The US reports PPI at the same time as retail sales.  Markets are less sensitive to it.  However, the takeaway, which will likely be underscored next week, is that US price pressures are building.  This is not a "sky is falling" call, just simply point out a gradual trend.  It may not yet be fully reflected in the University of Michigan's inflation expectations measure.  The August business inventories will also be incorporated into GDP trackers and forecasts. 

From the Fed, Yellen and Rosengren speak at a Boston Fed Conference.  Rosengren dissented in favor of an immediate hike.  The market is more sensitive to the Chair's remarks, but she may not address monetary policy in her opening remarks.  But we'll be watching.”