Market Attention on FOMC Minutes (and Other Things)

Originally posted at Briefing.com

An encouraging Housing Starts report for July failed to ignite follow-through buying interest on Tuesday. The major indices instead all coughed up a decent chunk of the gains they managed on Monday, choking a bit on a relatively weak showing from the information technology sector and Walmart (WMT). There does appear, however, to be some follow-through selling interest this morning.

The negative disposition comes in front of today's release of the minutes for the July Federal Open Market Committee (FOMC) meeting, which will be out at 2:00 p.m. ET.

Some participants apparently think they will reveal a hawkish-leaning FOMC, but of course that meeting took place before China's yuan devaluation and when oil prices, already down big, were still 13% higher than they are today. In other words, the major risk with the minutes today is that they will be over-analyzed and subject to accusations that was said then may not necessarily apply now.

The FOMC Minutes these days read like an open range of opinions that don't provide any clear insight into the Fed's policy path. To that end, they are accented with summaries that "some thought this," "a few thought that," and "several think this." The July minutes probably won't be any different, yet that still doesn't mean they can be overlooked entirely.

[Read: Special Feature: Chris Puplava’s Market Update and Brian Pretti on Threats to the Bond Market]

Surprises can and do happen when they are least expected.

In that vein, there were some headline surprises for the July Consumer Price Index (CPI), which showed both total CPI and CPI, excluding food and energy, increasing just 0.1%. The Briefing.com consensus estimate called for 0.2% increases in both readings.

The indexes for food (+0.2%) and energy (+0.1%) helped push up the all items index. Meanwhile, a 0.4% increase in the shelter index was the key driver behind the increase in the all items index, excluding food and energy. The advance in the shelter index helped offset declines in airline fares, used cars and trucks, household furnishings and operations, and new vehicles.

Over the last 12 months, the all items index is up 0.2%, having been suppressed by the energy index which is down 14.8% over the past year.

Excluding food and energy, the all items index rose 1.8% for the 12 months ending July. That is unchanged from June and is the fourth time in the last five months the 12-month change was 1.8%. The average annualized increase for core CPI over the last 10 years is 1.9%.

[Listen: Economist Says Inflation Could See a Pick Up Next Year]

The stability of core CPI is a development participants might construe as a basis for the Fed to rationalize a rate hike in the near term considering one side of its dual mandate is price stability. In this regard, market participants aren't necessarily viewing the headline readings for July as a friendly surprise when it comes to thinking about the Fed's monetary policy.

Target (TGT) investors, meanwhile, are seeing the retailer's latest earnings report as a friendly surprise. Target topped consensus earnings expectations and raised its full-year guidance, helping it stand out from Walmart, which missed expectations and cut its full-year guidance on Tuesday. Lowe's (LOW) for its part couldn't follow in Home Depot's (HD) footsteps, as the former company came up shy of consensus earnings estimates when it reported its second quarter results this morning.

In other developments, Germany's Bundestag approved the Greek bailout by a wide margin and Japan reported export and import data for July that was better than expected, yet still marked a slowdown from the prior month. That realization helped contribute to the broader slowdown concerns that have affected Asian markets and, in turn, have weighed heavily on commodity prices.

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