Fundamental Summary
The New York Empire State Manufacturing Survey showed that business activity continued to decline and that the labor market remains week though outlook remains optimistic. Full Report

Industrial production was up in September compared to August with Q3 posting the first quarterly increase since Q1 2015 though 1.0 lower YOY. Full Report

The CPI index for September increased 0.3% mostly due to shelter and gasoline. Medical care, motor vehicle insurance, and personal care all increased in September, as did the indexes for education, alcoholic beverages, airline fares, and tobacco. Home food index continues to decline. The indexes for communication, apparel, used cars and trucks, recreation, and new vehicles all declined. The all items index rose 1.5 percent for the 12 months ending September, its largest 12-month increase since October 2014. The index for all items less food and energy rose 2.2 percent for the 12 months ending September. The food index declined 0.3 percent over the span, and the energy index fell 2.9 percent. Full Report

Privately-owned housing units authorized by building permits in September and single-family authorizations in September both above revised August figure. Privately-owned housing starts in September were below the revised August estimate. Single-family housing starts in September above the revised August figure. Privately-owned housing completions in September were below the revised August estimate. Single-family housing completions in September were below the revised August estimate. Full Report

Seasonally adjusted initial jobless claims inccreased by 13,000 from the previous week’s revised level, revised by 1,000. There were no special factors impacting this week’s initial claims. This marks 85 consecutive weeks of initial claims below 300,000, the longest streak since 1970. Full Report

Philly Fed Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve. Indexes for general activity, new orders, and shipments were all positive this month. But firms reported continued weakness in overall labor market conditions. Firms expect continued growth for manufacturing over the next six months and are becoming more optimistic about employment expansion. Full Report

Existing-home sales rebounded strongly in September and were propelled by sales from first-time buyers reaching a 34 percent share, which is a high not seen in over four years, according to the National Association of Realtors®. All major regions saw an increase in closings last month, and distressed sales fell to a new low of 4 percent of the market. Sales are at their highest pace since June and are 0.6 percent above a year ago. Full Report

The Fed Watch Tool currently indicates a 69.5% chance of a rate hike in December 2016

Beige Book October 2016
Reports from the twelve Federal Reserve Districts suggest national economic activity continued to expand during the reporting period from late August to early October. Most Districts indicated a modest or moderate pace of expansion; however, the New York District reported no change in overall activity. Compared with the previous report, the pace of growth improved in the St. Louis, Kansas City, and Dallas Districts. Outlooks were mostly positive, with growth expected to continue at a slight to moderate pace in several Districts. Labor market conditions remained tight, with modest employment and wage growth noted over the reporting period. Most Districts characterized input costs and/or output prices as fairly flat, but prices increased slightly on net. Manufacturing activity was mixed, and the strong dollar continued to dampen exports of manufactured goods according to a few District reports. Most regions saw an uptick in retail spending, and outlooks were for modest growth in the months ahead. Reports on auto sales and tourism varied across Districts. Demand for nonfinancial services generally increased, and staffing firms noted steady or higher demand. Port traffic and e-commerce-related activity rose in Districts that commented on it, but reports on other transportation services mostly indicated weakness. Residential construction and real estate activity expanded further, although low home inventories continued to constrain sales in a few Districts. Home price appreciation continued at a modest pace in general, and commercial real estate activity and construction improved since the last report. Demand for business and consumer loans increased, aside from some seasonal slowing, and credit quality remained strong or improved. Agricultural conditions were mixed, as low commodity prices pressured farm revenues despite generally strong crop yields. There were signs of stabilization in the oil and natural gas sector, while reports of coal production were mixed. Full Report

Summary of FOMC speakers for the past week
Dudley NY Fed President (Dove, voter)
Expects to see an interest rate hike this year, doesn’t feel it’s a big deal and feels that the market is exaggerating the significance of a hike

Fischer Vice Chair (Neutral, voter)
Doesn’t see a threat to financial stability from current low rates. Economy’s low growth prospects, the rising household savings that come from an aging population,
weak investment, and a slowing in foreign economic growth are holding back interest rates

Rosengren Boston Fed President (Dove, voter)
Discussed his reason for dissent in the September meeting. Feels that 1.7% for core PCE is relatively close to the inflation target of 2% and unemployment rate of 5% is close to full employment and wants
to stabilize around full employment and inflation target. Also feels the risks of not acting now means having to do more faster in the future which means accommodation will no longer be gradual

Tier 2 and 3 Data for the week ahead
Monday: Manufacturing PMI
Tuesday: Consumer Confidence
Wednesday: Services PMI, New Home Sales
Thursday: Core durable goods orders, Initial Jobless Claims, Pending Home Sales
Friday: GDP, Employment Cost Index (QoQ) (Q3)

Technical Summary