What to know this week

Traders this week will receive a new group of economic data focused on inflation, which will help show whether price pressure has continued during the economic upswing. Separately, some travel restrictions will be lifted for those coming to the US this week, offering a potential boost to a number of travel-related companies.

Wall Street has been closely monitoring the incoming inflation data during the reopening. Companies have struggled to meet an increase in demand as consumer mobility picked up, leading to shortages and a number of supply chain-related disruptions, which in turn have contributed to rising prices.

The Bureau of Labor Statistics̵[ads1]7; Consumer Price Index (CPI), due to be published on Wednesday, is expected to show that high inflation continued into October, with a number of goods and services for consumers posting ongoing price increases.

Consensus economists expect the CPI to rise 5.8% in October compared to last year, accelerating from September 5.4% annual rate to reach the fastest increase since 1990. And on a month-on-month basis, the CPI probably rose 0, 5% in October to pick up from September’s 0.4% interest rate.

“We will look for signs that the inflation problem is at its peak,” David Donabedian, chief investment officer at CIBC Private Wealth US, wrote in an email on Friday. “But our expectations are still high, and we expect to talk about high inflation six months from now. It does not go away.”

With the exception of more volatile food and energy prices, consensus economists also expect a rise in core categories. During last year, the core CPI probably rose to a 4.3% interest rate in October, up from September’s 4.0% year-on-year increase. It would come just below the July 4.5% year-over-year increase, which had been the largest increase in the core interest rate since 1991.

Some of the reopening-related categories, which had seen an increase in prices earlier in the summer, had cooled slightly in September, with the latest Delta variant wave of the pandemic dampening consumer demand for travel and related activities. But expect an upturn in October, some economists said.

“The acceleration in the core CPI is likely to be driven by services, with real activity beginning to pick up amid easing of covid concerns. Air fares were still down almost 25% from pre – pandemic levels in the September report, and we believe there will be opportunity for a strong recovery this month, “Bank of America economist Michelle Meyer wrote in a note. “Transport services should also be supported by a rise in rental prices for cars and trucks, and a modest increase in the prices of motor insurance. Accommodation will be another recipient of the increase in travel.”

What to know this week

LOS ANGELES, CA – OCTOBER 21: Shoppers leave Nordstrom at The Grove on Thursday, October 21, 2021 in Los Angeles, CA. Shoppers enjoy the beautiful autumn day. (Francine Orr / Los Angeles Times via Getty Images)

In terms of goods, however, Meyer noted that retailers of housing and furniture, clothing and other supplies may have cut prices in October to help push up holiday sales, which could lead to softer overall price increases for these categories in Wednesday’s CPI. report.

Nevertheless, inflationary pressures have remained much more pronounced and prolonged than some economists had expected. Supply chain shortages and rising raw material costs have led to a number of individual companies announcing price increases. Mondelez (MDLZ), the maker of Oreo cakes and Ritz Crackers, said they implemented 7% price increases in the US to compensate for rising costs. Clorox (CLX) said during the earnings call last week that they would increase prices above 70% of the portfolio of cleaning and housing supplies by the end of the financial year. And CEOs from a wide range of companies, from cosmetics company ELF Beauty (ELF) to outdoor recreation company Vista Outdoor (VSTO), have recently discussed rising prices for their products in interviews on Yahoo Finance Live.

For investors, the implications of this persistent inflationary pressure could mean tighter monetary policy and higher interest rates. Federal Reserve officials fine-tuned their language on inflation in their monetary policy statement last Wednesday to show that they “expected” inflation to be temporary. This marked a deviation from their previous assurances about the temporary nature of this price pressure.

“We said that supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to significant price increases, and we said that advances in vaccinations and easing of supply constraints are also expected to support continued gains in economic activity and employment, as a reduction in inflation. “said central bank governor Jerome Powell during the press conference following the FOMC meeting last week. “So, we try to explain what we mean and also acknowledge more uncertainty about ‘transient’.”

The United States eases travel restrictions for vaccinated travelers

On Monday, the United States is set to reduce travel restrictions for international visitors who show evidence of vaccination, and ease what had been months’ worth of restrictions on international tourism and entry into the United States.

Both air and land border travel will be included in the changes. These restrictions were first put in place in the early days of the Trump administration’s pandemic in March 2020, and have been maintained by the Biden administration since January. Visitors from a number of countries had been affected by these travel restrictions to the United States since the start of the pandemic, including from large parts of Europe and China. “Foreign nationals entering the United States under the new rules must show proof of vaccination and a negative COVID-19 test taken within three days if traveling by air.”

The relaxation of these restrictions will lift a weight on a number of companies in the aviation and accommodation industry. And already a number of CEOs of these companies have emphasized the potential pent-up demand that this would unlock.

Airbnb CEO Brian Chesky was one such leader who pointed to the almost immediate reaction among consumers after the first announcement of easing restrictions on the White House last month.

“On October 15, I think that was the date President Biden announced the reopening of the borders and asked travelers to come to the United States. Within a week of that announcement, we saw a 44% increase in the number of nights booked for cross-border stays. in the US on Airbnb for stays on November 9 and later, which is when the borders were opened, “Chesky said during the company’s earnings interview last week.

However, this could also lead to some extended waiting times and travel disruptions in the short term, some executives warned.

“It’s going to be a bit sloppy to begin with. I can assure you that there will be lines unfortunately … but we’ll get it sorted out,” said Ed Bastian, CEO of Delta, at a travel event last month.

Data from the Transportation Security Administration (TSA) have shown an increase in the number of travelers checked in at US airports in recent months, indicating a further jump in demand. On November 4, the travel throughput was more than 1.9 million, a sharp increase from 867,105 on the comparable day in 2020, but still below the more than 2.5 million travelers counted on the comparable day in 2019.

Financial calendar

  • Monday: No notable reports are scheduled for release

  • Tuesday: NFIB Small Business Optimism Index, October (99.3 expected, 99.1 in September); PPI final demand, month over month, October (0.6% expected, 0.5% in September); PPI excluding food and energy, month over month, October (0.5% expected, 0.2% in September); PPI final demand, year over year, October (8.6% expected, 8.6% in September), PPI excluding food and energy, year over year, October (6.8% expected, 6.8% in September)

  • Wednesday: MBA loan applications, week ended November 5 (-3.3% last week); Initial unemployment claims, week ended 6 November (265,000 expected, 269,000 during last week); Continued claims, week ended October 30 (2.105 million last week); Consumer price index, month over month, October (0.4% expected, 0.2% in September); Consumer price index, year over year, October (5.8% expected, 5.4% in September); Consumer price index excluding food and energy, year over year, October (4.3% expected, 4.0% in September); Wholesale, month over month, September final (1.1% expected, 1.1% in previous print); Monthly Budget Statement, October ($ -61.5 billion in September)

  • Thursday: No notable reports are scheduled for release

  • Friday: JOLTS Job Openings, September (10.439 million in August); University of Michigan Sentiment, so far November (72.4 expected, 71.7 in October)

Income calendar

  • Monday: Coty Inc. (COTY) before the market opened; Clover Health Investment Corp. (CLOV), The RealReal (REAL), Lemonade (LMND), Roblox (RBLX), PayPal (PYPL), Virgin Galactic Holdings (SPCE), TripAdvisor (TRIP), SmileDirectClub (SDC), AMC Entertainment Holdings (AMC), Zynga (ZNGA) after the market closed

  • Tuesday: Blue Apron (APRN), Workhorse Group (WKHS), Palantir (PLTR) before the market opens; DoorDash (DASH), Poshmark (POSH), Coinbase (COIN), Vroom Inc. (VRM), fuboTV (FUBO), Plug Power (PLUG), Wynn Resorts (WYNN), Nio (NIO) after market closure

  • Wednesday: Disney (DIS), Opendoor Technologies (OPEN), Compass (COMP), Bumble (BMBL), Wish (WISH), Affirm Holdings (AFRM), Green Thumb Industries (GTII), SoFi Technologies (SOFI), Beyond Meat (BYND) , Figs (FIGS), 23andMe Holdings (ME) after market close

  • Thursday: Tapestry (TPR), Yeti Holdings (YETI), Organon & Co. (OGN) before the market opened; Blink Charging Co. (BLNK) after the market closed

  • Friday: Baked Holdings (BKKT), Warby Parker (WRBY) before market opening

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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