Things to Watch

– U.S. THIRD QUARTER GDP: On Thursday, U.S. government data will likely show the domestic economy expanded last quarter at an annualized pace near 4.5%, boosted by a wave of consumer spending this summer that felt like a major release of pent-up post-pandemic demand for services. If the GDP print surprises to the upside (closer to 5% or higher), we could see U.S. Treasury yields take another leg higher. Some cautious observers have argued that the pace of consumer spending this summer is unsustainable, driven by a frenzy of outlays on summer travel and other leisure-related categories.

– MAGNIFICENT SEVEN 3Q EARNINGS: The busiest week of third quarter earning season is upon us, with 162 S&P 500 companies scheduled to report results. Among the headliners will be four of the so-called Magnificent 7 stocks: Microsoft (MSFT) and Alphabet (GOOGL) Tuesday evening, Meta Platforms (META) post-market Wednesday, and Amazon.com (AMZN) after the closing bell Thursday.

– KEY SEMICONDUCTOR DUO: Electronic design automation software company Cadence Design Systems (CDNS) reports quarterly results later today. Investors will listen closely to CDNS’ comments on expected demand trends in China after the U.S. tightened export controls of key chips and related equipment last week. Texas Instruments (TXN) delivers results Tuesday. The focus will be on management’s guidance on the trajectory of the company’s aggressive capacity expansion plans to meet expected increased demand for U.S. production of chips for the industrial and automotive sectors.

– SUPER-CORE INFLATION: On Friday, we get the September reading of Fed Chair Powell’s favorite gauge of underlying inflationary in the U.S. - the amusingly dubbed “super-core” component of the personal consumption expenditures (PCE) index. This somewhat narrow measurement is expected to register a 0.4% reading for September, up from 0.1% in August. Super-core PCE focuses on costs for services provided by accountants, plumbers, hairdressers, landscapers, lawyers, etc.