By Theresa Sheehan
WASHINGTON (MNI) – The week ahead is shortened by the Columbus Day
federal holiday Monday, closing most markets and government offices
thought it’s not universally observed across school districts and
private businesses. Retailers use this three-day weekend as an
opportunity to clear out back-to-school merchandise, get a headstart on
Halloween sales, and even begin to offer a few Christmas items for
early-bird shoppers. The holiday will not delay the scheduled release of
the weekly indexes of retail activity.
Also, earnings season for the third quarter 2011 begins with
release of numbers from Alcoa on Tuesday. The pace of reports is still
slow, but will gather steam in the October 17 week.
Economic Data
While the data calendar is reasonably busy, only the numbers for
retail and food sales for September at 8:30 ET on Friday are likely to
have a big impact. This data could be on the soft side except for motor
vehicle sales which were solid for the month. Consumers were generally
quite cautious in their spending in September, but there is the
possibility that decent sales activity at department stores and
discounters could provide a little upward momentum. Otherwise, gasoline
prices declined and that will reduce the dollar amount of sales for
service stations. Elsewhere consumers stuck to necessities, although a
good bargain could tempt some buying.
The two earliest of the monthly measures of consumer confidence
will help gauge if attitudes were less pessimistic as October started.
The IBD/TIPP Economic Optimism Index for October at 10:00 ET on Tuesday,
and the preliminary Reuters/University of Michigan Consumer Sentiment
Index at 9:55 ET on Friday both come on the heels of a slight
improvement as September ended. Current readings are consistent with a
gloomy outlook, but any brightening would be welcome at this point.
The Import and Export Price Indexes for September at 8:30 ET on
Friday should reflect slight increases in petroleum prices for the
month, and a modest decline in agricultural product prices. Upward
pressure from prices for imports of motor vehicles should abate further
as supplies of finished cars and parts become more plentiful.
Data on international trade for August at 8:30 ET on Thursday will
help round out the available information for net exports for the
preliminary third quarter GDP report at 8:30 ET on Thursday, October 27.
Imports typically start to rise at this time of year to meet expected
demand for the holiday shopping season, but retailers are signaling that
they have modest expectations for the upcoming months. Inventory
building will probably be quite restrained.
The numbers for business inventories for August at 10:00 ET on
Friday should show that inventories were higher for retailers, in part
due to lackluster consumer spending. Increases in inventories for
factories and wholesalers were already reported.
Initial claims for the week ended October 8 at 8:30 ET on Thursday
could include the usual rise that shows up at the start of a new
quarter. This is the time when the benefit paid out can see an increase.
However, the overall trend in claims appears to be downward, albeit
slowly and unevenly.
Central Bank Activity
The calendar for routine central bank monetary policy announcements
is a blank until the last week of October when the Bank of Canada,
Reserve Bank of New Zealand, and Bank of Japan are scheduled to hold
meetings.
In the coming week, the Federal Reserve Board of Governors is
expected to meet in closed session on Tuesday to perform a routine
review discount rate policy.
Only a few Fed officials will be giving public remarks over the
course of the week, and all of them have recently spoken elsewhere. We
do not anticipate any change of stance when we hear from Cleveland Fed
President Pianalto or Philadelphia Fed President Plosser on Wednesday,
or Minneapolis Fed President Kocherlakota on Thursday.
What may have something new to say are the minutes from the FOMC
meeting of September 20-21 which are set for release on Wednesday at
14:00 ET.
Of particular interest may be the discussion about how to support
the housing market and the decision to reinvest maturing and prepayments
in Agencys and Agency MBS back into Agency MBS.
U.S. Treasury Auctions
On Thursday, the U.S. Treasury will auction new 3-year notes, and
reopenings of the 10-year notes and 30-year bonds as the final leg of
the refunding on Tuesday through Thursday, and all will settle on
Monday, October 17. A reopening of the 30-year TIPS bonds will be
announced on Thursday, to be auctioned on Thursday, October 20.
The next quarterly refunding package will be announced on
Wednesday, November 2 at 9:00 ET.
Third Quarter Earnings Season
The third quarter earnings season has a few early entries. The
report that markets look to as the unofficial opening of the season —
that for Alcoa –will be released on Tuesday. On Wednesday, some of the
highlights will be from Host Hotels and Resorts, and Pepsico. On
Thursday, the major reports will be from Google and JPMorgan Chase.
Mattel reports on Friday.
** Stone & McCarthy Research Associates **
[TOPICS: M$$FI$,M$U$$$,MAUDS$]