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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (61550)	5/21/2006 12:50:01 AM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

Housing down, inflation up The Fed is data-dependent, to be sure, but on which data? By Rex Nutting, MarketWatch Last Update: 12:00 AM ET May 21, 2006 marketwatch.com WASHINGTON (MarketWatch) -- With all due respect to a couple of important reports on home sales, the most important U.S. economic number of the coming week is likely to be one most people have never heard of: the core personal-consumption expenditure price index. All you have to know about that mouthful of words is that this is the inflation number the Federal Reserve respects and fears. Forget the consumer-price index; if the Fed were to target inflation, the core PCE price index would be the target, not the CPI. The Commerce Department will report on the core PCE price index on Friday morning, as part of its income and spending release. Economists surveyed by MarketWatch are forecasting a 0.2% increase in core inflation after a 0.3% gain in March. See Economic Calendar. The other main releases will be the April new-home sales report Wednesday and the April existing-home sales report Thursday. The survey looks for new homes to fall about 5%, while existing homes could slip about 2%. Lots of attention will be paid on Thursday, when the Commerce Department revises its first-quarter growth number from 4.8% annualized to perhaps 6%. That's stellar growth, but remember fourth-quarter growth was a tepid 1.8% and growth in the current quarter will be closer to 3.2%. With growth now moderating as expected, the only thing standing in the way of a rate-hike pause is inflation. <MORE>