Markets Brace for Volatility Ahead of Key US Data
Markets may face volatility with Fed speech, GDP, and inflation data due this week.
- Fed Chair Powell’s speech could hint at future rate moves
- GDP and inflation data may steer market sentiment
- Housing market data adds pressure on economic outlook
Fed Speech, GDP, and Inflation Data Set the Stage
This week is shaping up to be pivotal for financial markets as several major U.S. economic indicators are due for release. From a highly anticipated speech by Fed Chair Jerome Powell to crucial GDP and inflation figures, investors should prepare for possible market volatility.
The action begins on Tuesday, with Powell’s speech likely to offer clues on the Federal Reserve’s outlook regarding interest rates and inflation. With inflation still above the Fed’s 2% target, traders will be listening closely for any signs of a more hawkish or dovish stance.
GDP, Housing Data to Gauge Economic Health
On Wednesday, the market will absorb the August New Home Sales report, offering insight into consumer demand amid rising mortgage rates. By Thursday, attention shifts to Q2 2025 GDP data and August Existing Home Sales. These indicators will help determine if the U.S. economy is maintaining momentum or starting to slow under the weight of higher borrowing costs.
GDP growth or contraction will directly influence expectations for future Fed moves. If the economy is stronger than expected, markets might brace for prolonged high rates. Conversely, signs of economic weakness could fuel speculation about potential rate cuts.
All Eyes on PCE Inflation on Friday
Closing the week on Friday is the August PCE Inflation data—the Fed’s preferred inflation gauge. This release may be the most critical of all. If inflation remains sticky, the Fed could lean toward keeping interest rates elevated. However, a softer reading might boost hopes for a policy pivot.
The combination of these events could spark market volatility, especially as investors attempt to position ahead of the Fed’s next policy meeting.
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