By Theresa Sheehan

PRINCETON (SMRA) – The week ahead, shortened by the Columbus Day
observance on Monday, leaves a somewhat compressed scheduled of economic
data releases later in the week. These will include the September data
on retail sales and the CPI, which are also likely to be the highlights
of the week. On Tuesday, release of the FOMC meeting minutes from
September 21 may shed some light on the current policy debate.

The Economic Data

The economic data calendar is weighted towards the end of the week
when several important reports are expected.

The September report on retail and food sales at 8:30 ET on Friday
will probably have the most market interest. The weekly data on retail
activity were volatile, and on balance present a somewhat softer
prospect for the government report. Discretionary spending may have been
lackluster outside of a few hot items like the release of the latest
version of the popular game Halo. However, back-to-school shopping may
have picked up from the slow pace of August, and sales at department
stores and for education staples may be relatively strong.

At the same time the retail data is being released, so is the
Consumer Price Index for September. This comes of the heels of the
Import Price Index for September at 8:30 ET on Wednesday, and the PPI
data for September at 8:30 ET on Thursday. The story behind all the
reports will probably be that of some slight upward pressure in energy
prices, as well as gains in foods related to the higher prices for
wheat. Outside of food and energy, there appear to be few sources of
higher prices.

The New York Fed’s Empire State Survey for October is also set for
the 8:30 ET on Friday time slot. It is the earliest of the reports on
the manufacturing sector, and will set the tone for expectations for the
Philadelphia Fed’s Business Outlook to be released on Thursday, October
21. All the District Bank surveys for manufacturing looked decidedly
softer in September, and October is not likely to look a good deal
stronger.

The two earliest of the monthly reports on consumer confidence are
set for release during the week. The IBD/TIPP Economic Optimism Index
for October is at 10:00 ET on Tuesday, and the preliminary
Reuters/University of Michigan Consumer Sentiment Index for October is
at 9:55 ET on Friday. The major monthly indexes were mixed in September,
but were consistent with continued sluggish readings over the last few
months. The weekly ABC Consumer Comfort Index is hinting that election
season is dragging spirits down again.

The data on international trade balances in August at 8:30 ET on
Thursday will provide a little firmer outlook for net exports in the
advance third quarter GDP report scheduled for Friday, October 29. The
widening of the trade gap in June related to early orders for holiday
merchandise gave way to a narrower reading in July that should be
maintained into August.

The business inventories report for August at 10:00 ET on Friday
will provide the numbers for retail inventories to add to the previously
report data for wholesalers and factories.

Initial claims for jobless benefits in the week ended October 9
should continue to look better. Claims were down for the last two weeks,
and may manage another slight decline as layoffs in government abate,
and other sectors remain reluctant to lose skilled workers.

The weekly measures of retail activity are expected as usual on
Tuesday morning despite the Federal holiday on Monday. Neither the
ICSC/Goldman-Sachs index, nor the Redbook Average is delayed by this
particular observance.

Federal Reserve Activity

The meetings of the FOMC meeting of September 21 will be released
on Tuesday at 14:00 ET, and may provide a little more information on the
Fed’s stronger statements on price stability and intentions on further
policy easing. In particular, there may be more to define the structure
of any possible large scale purchases of assets.

There will be a number of Fed officials speaking next week. New
York Fed President William Dudley will be in Washington on Monday to
speak at a meeting of the Institute of International Bankers “2010
Breakfast Regulatory Dialog with Government Officials.” New Vice Chair
Janet Yellen will be in Denver to address the NABE annual meeting. On
Tuesday, Kansas City Fed President Thomas Hoenig will speak at the NABE
conference.

On Wednesday, Richmond Fed President Jeffrey Lacker will speak to
business leaders in Chapel Hill, NC. Thursday, Minneapolis Fed President
Narayana Kocherlakota will give another speech on the topic of the FOMC.

The Boston Fed is holding a conference on Friday and Saturday, at
which Chairman Ben Bernanke will give the keynote address on Friday, and
Boston Fed President Eric Rosengren will deliver remarks on Saturday.
San Francisco Fed Research Director John Williams will be at the
conference on Friday, and will speak on “Have We Underestimated the
Probability of Hitting the Zero Lower Bound?”

Also on Friday, Atlanta Fed President Dennis Lockhart will speak
about the U.S. economic outlook and monetary policy.

There are no major central bank announcements on the calendar until
Tuesday, October 19 when the Bank of Canada issues its monetary policy
statement. The Bank was cautious, and further rate increases are in
doubt after three consecutive hikes of 25 basis points each that brought
the overnight rate back up to 1.0%.

U.S. Treasury Auctions

The new 3-year notes will auction on Tuesday, and the reopening of
the 10-year notes and 30-year bonds will auction on Wednesday and
Thursday, respectively. All will settle on October 15.

Third Quarter Earnings Season

The third quarter earnings season has yet to get into full swing.
The next big wave of reports will start on October 18. However, there
are some major reports during the October 11 week. Among the more
notable are Charles Schwab and JPMorgan Chase on Wednesday; Safeway on
Thursday; and Gannett, General Electric, and Mattel on Friday.

** Stone & McCarthy Research Associates **

[TOPICS: M$$FI$,M$U$$$,MAUDS$]