The September FOMC meeting‘s not the only macro-market game in town this week, although it’ll probably feel like it.
In addition to the first Fed hike in over three years, markets will digest a smattering of US macro data, including retail sales figures covering August.
The spending data will be eyed in the context of July’s release which suggested the previously bulletproof US consumer ran out of gas at the beginning of Q3, when prices at the pump rose anew.
The figure above’s a reminder: Both headline and control group sales abruptly contracted in July. The decline on the control group, which economists use to refine GDP estimates, stunned forecasters.
That’s the context for the September 16 figures, covering August. The data will be released by the Commerce Department five and a half hours before the Fed decision.
Needless to say, macro watchers will be keen for any additional evidence that rising fuel costs are crimping Americans’ capacity to make discretionary purchases.
“The national average for a gallon of regular gasoline went up 13 cents since last week as crude oil prices continue climbing [amid] volatility in the Strait of Hormuz,” the AAA remarked, in its latest editorial. “Pump prices are currently comparable to early June.”
“Oil at $100/bbl takes the headlines but diesel is the key real-economy pressure point,” BofA’s Michael Hartnett wrote, in the latest installment of his popular weekly “Flow Show” series, noting the impact on shipping, trucking, agriculture, construction and mining.
That’s not going to have an immediate impact on economy-wide inflation, but it’ll be passed along soon enough assuming there’s no relief.
Other updates due out of the US include the first of this month’s housing data, with builder sentiment covering September due Wednesday and starts and permits covering August on Thursday.
Elsewhere, China will release retail sales, IP and fixed investment figures for August at some point over the next several days, and the Bank of Japan, under governor Bessent-san, will deliver a rate hike, presumably accompanied by aggressively hawkish forward guidance.
Diesel and heating oil price similarly.
An average increase of $1300 per household that use home heating oil can be expected this heating season.
Good thing its been a record warm year, with the mother of all El Ninos building, and no Polar Vortex news (yet…?)!
The “crack spread” is the difference between crude and heating oil. Diesel IS heating oil, but with a few adulterants added to run cleaner in engines, etc. By law, heating oil is tinted a nice red color to prevent use as diesel and to be taxed differently. The crack spread has been rising for months and hit $110 last week! If you want to know “the trade” you missed it in VLO. Up 60% since April. Refiners that haven’t been blown up are having a great year.
I wonder if all those farmers out in the fields for harvest will notice what’s happening and vote accordingly? Surprised Trump hasn’t dangled more bribes out there for all the poor farmers dealing with the consequences of their votes.
$10 US a gallon for diesel in Scotland right now and I’m sure the prices are similar (or higher in some places) in the EU.
That’s my point about heating oil is that we’re gonna have a supply and demand issue due to the northern hemisphere heating season.
Most of the summer we had one customer base demanding basically same product as the winter customer that is now showing up for.
A lot of homes in EU are also warmed with kerosene, which is the same crack as jet fuel, similar to HO and diesel. Add to all this the el Nino pressure.
Bessent-san (still laughing, good one) “I am the yukaku now!”
It’s going to be an interesting week…
In central CA, diesel price on Tuesday afternoon was $8.20/gallon. How do you budget that?
Trump’s EV ‘incentives’ (i.e., sky-high gas and diesel) should be a growing story. A diesel F-150 with a 26-gal tank at $7 diesel costs $180 to fill up. A safer, more durable, and vastly higher tech Cybertruck with a 123 KWh battery costs under $15 to fill up at home with east Texas electricity coop pricing ($17 in Austin).
Trump may single-handedly save the Cybertruck. No, really.
Now Trump blaming Ukraine, wants them to stop blowing up Russian diesel refineries. But it’s the best single move Ukraine has made in about 6 months, with effective reduction in Russian ability to move front lines to show as proof of concept. It’s so typical to blame the victim from this White House. You know, the one with tarps on the roof while they squabble with the zoning department.