Next week is going to be pretty event filled due to lots of earnings releases. On the economic front the important data to watch will be
- Producer Price Index (PPI) on Thursday 08:30 AM ET
- Weekly Jobless Claims on Thursday 08:30 AM ET
- Consume Price Index (CPI) on Friday 08:30 AM ET
I think one of the most significant development which has transpired last week and needs to be watched over the next week is the rise in Treasury yields and the behavior of the US dollar. With interest rates in Europe starting to rise the US dollar has fallen quite rapidly against the Euro and commodity prices have risen in dollar terms. With the jobs market starting to gather momentum, I think we are setting the stage for increased inflation expectations in the US. That is the reason I have listed the PPI and CPI as important data releases for the coming week. I think even the US fed will have to start thinking about raising rates sooner than it wanted. I should note I am not expecting very high inflation rates as there is still a lot of slack in the labor market and home prices are falling. With possibility of inflation rates rising the chances of interest rates falling in the short run are very low. I haven’t pulled the plug yet but I am thinking about going long the TBT which is an ETF that goes up if yields in long term treasuries go up. Here is more info about TBT.