Macro Economic Calendar: Week of January 27, 2025

Summary: FOMC meeting on Tuesday, no expected changes in the Fed Funds Rate. Markets will be looking to the minutes and press conference for guidance.

Where to focus this week

It’s Fed Week on Wall Street. All eyes will be on the FOMC interest rate decision at 2 p.m. ET Wednesday followed by Chair Powell’s press conference that begins at the bottom of that hour. Unlike recent meetings, there’s no drama going into the January Fed gathering. The futures market points to no change in the policy rate, presumably leaving the Fed Funds Effective yield at 4.33%. We’ll look out for any comments on how the Committee sees President Trump’s policies, including tariffs, deregulation, and potentially lower taxes, impacting the US economy. While the Fed asserts that they do not make judgments on policies not yet known, it was clear in its December Summary of Economic Projections that Trump’s proposals seeped their way into the FOMC’s growth and inflation expectations. We expect stocks and bonds to rally if Powell underscores weak housing and manufacturing data trends along with wage growth under 4% being aligned with the FOMC’s 2% PCE inflation target. If he focuses on potential inflation from pro-growth Trump policies and tariffs, then yields should spike, putting pressure on stocks. 

Weekly calendar look ahead

Before Fed Day, we will get New Home Sales on Monday and Durable Goods on Tuesday. Also on the 28th is the January Consumer Confidence report which should show upbeat vibes relative to much of last year. Then after the FOMC gathering, it will be all about PCE inflation. Thursday is the big day – that's when Q4 GDP and the PCE Price Index hit the tape. The consensus calls for 3.0% annualized economic growth for the previous quarter while PCE inflation may come in at 1.1% (quarter-on-quarter, annualized). Core PCE is seen as having risen by 1.9% in Q4. Then on Friday, December PCE crosses the wires in the pre-market, but with Q4 figures already in hand, traders will have a firm beat on how consumer prices verified in December. Still, we see a 0.3% increase in headline PCE and a 0.2% uptick in the core rate last month, which would bring the annual rates to 2.6% and 2.8%, respectively. Given some fears lately of an inflation resurgence, any kind of dovish prints would present upside risks for stocks. Another bullish factor is what transpired beginning at this time last year; easy year-on-year inflation comps may help keep a lid on annual CPI and PCE prints over the next few months.

Policy Framework

On the fiscal front, several Treasury auctions will keep fixed-income investors on edge, but recent auctions have been generally strong. It’s apparent that there’s ample demand, so far, for Treasury securities when yields approach the 5% mark. Also, a December update on the US Money Supply hits after the bell on Tuesday.  November M2 jumped by the most since December 2021, stoking some inflation worries, so this week’s print will be particularly interesting ahead of the Fed meeting. We don’t expect a hot number to move the futures market, but it would add to a lengthening list of inflation worries that have accumulated since September.

Risks and Opportunities

In terms of price action, cyclical sectors and the value factor have worked to kick off 2025. The Real Estate sector could be in favor if we see a friendlier Fed and tamer inflation numbers this week – it underperformed sharply last year amid rising interest rates and ongoing woes in the commercial property segment. The Fed Funds futures market prices just one or two cuts this year, so if more easing enters the picture, last year’s losers could post big alpha. Elsewhere, oil prices have shown some decent moves lately, but $80 is resistance on WTI; we’d like to see a rally through that level to sustain the recovery in oil & gas equities. Megacap tech will be in focus this week as Q4 earnings reports roll in. 

Quick Hits

• Cyclical Sectors like Consumer Discretionary, Industrials, Materials, and Energy have gathered momentum YTD in 2025, look for this trend to continue if the narrative coming out of DC remains focused on revitalizing the economy

• Real Estate is coming off a weak 2024 and could be primed for a breakout to the upside if market expectations around future interest rates shift lower

• Energy is in the news with the new administration’s focus on energy independence, but any new drilling will take time to materialize into productive capacity. In the meantime, look at the $80 level on WTI as a key resistance point. If we can crack $80, we’ll look for a rally to the $87-$88 level

You can view all the market-moving data points in the Allio app and on the Allio Macro Dashboard. Tactically moving between stocks, bonds, commodities, currencies, including crypto, is easy with our innovative Dynamic Macro Portfolios. Our tools and insights help all investors navigate complex global markets and identify opportunities, which has never been more critical as we await this key Fed decision and commentary next week.