By Theresa Sheehan
PRINCETON (SMRA) – The week ahead has a sparse data calendar, with
little that will capture more than momentary market attention. It may be
the weeks’ series of central bank announcements that will be the big
news.
The Economic Data
After an extremely busy data schedule in the November 29 week, the
calendar shifts to a few reports, most of which are second-tier in
market interest.
Friday is both the busiest day and the one with the more important
economic data releases.
The data on the international trade deficit for October at 8:30 ET
on Friday will do much to set expectations for the preliminary estimate
of third quarter GDP when it is released on December 22. Demand for U.S.
goods abroad appears to be on the rise at a faster pace than that for
goods imported to the U.S. If so, this means lower net exports in the
GDP report.
The preliminary reading for the Reuters/University of Michigan
Consumer Sentiment Index in December is at 9:55 ET on Friday. Consumers’
perception of conditions seems to be taking a turn for the better. The
end of the election has reduced uncertainty, and there is more positive
news on the economy to lift spirits, particularly in regard to the labor
market. Both the Conference Board and University of Michigan measures
showed marked improvement at the end of November, and this should
continue into the first weeks of December.
The November indexes for import and export prices are set for
release at 8:30 ET on Friday. The data is unadjusted. Imports are likely
to gain on petroleum once again on higher oil prices. There may also be
some impacts from foreign exchange rates. Export prices are likely to
rise on gains in commodities like wheat, corn, and soybeans. The value
of the U.S. dollar was generally more stable in November, and should
have a limited impact on prices.
Initial claims for the week ended December 4 at 8:30 ET on Thursday
will probably continue to move towards a lower trend level of around
420,000-430,000. Seasonal adjustment factors may play a part as there
appear to be fewer than usual year-end layoffs taking place. However,
there also appears to be some fundamental improvements in the labor
market.
Wholesale trade for October at 10:00 ET on Thursday will offer some
further evidence of conditions in inventories as the third quarter
begins. When combined with the data on factory and retail inventories,
it should be consistent with some modest rebuilding of inventories for
the overall economy.
Job Openings and Labor Turnover (JOLTS) for October at 10:00 ET on
Tuesday should show the data moving past the atypical activity of the
summer months when there were large layoffs in government and fewer
separations in some manufacturing industries. It is probable there will
be some increases in openings to match the gains in hires, and fewer
separations and layoffs.
Consumer credit for October at 15:00 ET on Tuesday may show another
rise in credit outstanding as motor vehicle sales were robust in the
month. This would be a third month of gains in nonrevolving credit.
Revolving credit has been falling since September 2008, and probably
will continue that trend.
The Flow of Funds report for the third quarter at 12:00 ET on
Thursday will provide a look at conditions for domestic nonfinancial
debt. Household debt has been falling since the start of 2009, while
that for businesses began to grow again in 2010. The Federal debt has
been rising in double digits since 2008.
The Monthly Treasury Statement for the second month of fiscal 2011
will be released on Friday at 14:00 ET. There has not been a surplus
month since September 2008 and November will not be an exception.
U.S. Treasury Auctions
The next leg of the quarterly refunding package will auction on
Tuesday, Wednesday, and Thursday with a new 3-year note, and reopenings
of the 10-year note and 30-year bond, respectively. All will settle on
December 15.
Central Bank Activity and Public Speeches
The next meeting of the FOMC is on Tuesday, December 14, the week
after next. The press blackout period in advance of a meeting starts on
Tuesday. On Monday, Richmond Fed President Jeffrey Lacker will give a
speech, but after that the public engagement calendar is a blank for Fed
officials. It will likely remain quite sparse through the end of the
month until the holidays are over.
Four major central banks will make routine monetary policy
statements next week. Given the turmoil in the Eurozone debt markets,
all will be carefully parsed.
The Reserve Bank of Australia makes its announcement in the late
hours of Monday at 22:30 ET. A further tightening of the current 4.75%
cash rate is expected, probably of 25 basis points.
The Bank of Canada makes its statement on Tuesday at 9:00 ET. The
Bank currently has a bias towards tightening, but has said, “any further
reduction in monetary policy stimulus would need to be carefully
considered.” The Bank hiked the overnight rate in June and July by 25
basis points to the current 1.00%. Since then it has been on hold, in
part because of deterioration in the U.S. economy. Now that that is
passing, the Bank could decide it is time for further increases.
The Reserve Bank of New Zealand will announce its monetary policy
decision late in the afternoon on Wednesday in U.S. time. The Bank has
signaled that “further removal of monetary policy will be required at
some stage.” There may be another 25 basis point hike in the current
3.00% official case rate.
The Monetary Policy Committee of the Bank of England will meet on
Wednesday and Thursday. No change in policy is currently expected when
the decision is announced on Thursday morning before markets open in the
US. However, the statement could in some respect address the turmoil in
sovereign debt markets in Europe, and particularly in neighboring
Ireland.
** Stone & McCarthy Research Associates **
[TOPICS: M$$FI$,M$U$$$,MAUDS$]