Posted by on February 20, 2017 1:00 pm
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Categories: Atlanta Fed Australia BOE Boise State University Brazil Business Case-Shiller China Committees consumer Consumer Confidence Consumer Sentiment Cornell Club in New York CPI Creditors Dennis Lockhart Deutsche Bank Economy Economy of the United States Eurozone federal government Federal Open Market Committee federal reserve Federal Reserve System Financial Planning Association of Minnesota flash Forecaster’s Club of New York france germany Greece House of Commons House of Lords Initial Jobless Claims japan John Williams Kansas City Fed Kazakhstan March FOMC Markit Michigan Minneapolis Fed Monetary Policy Neel Kashkari New Home Sales New Zealand Philadelphia Fed Reserve Bank of Australia S&P/Case San Francisco Fed SocGen the University of Michigan the University of Pennsylvania Trade Balance UK Parliament University Of Michigan US Federal Reserve Wharton School

In this holiday-shortened week, attention will be on the US FOMC minutes, housing data and consumer confidence. There will be GDP, PMI and inflation releases across the Euro Area as well as the latest Greek Eurogroup meeting. Look for GDP and public finances data in the UK. In emerging markets, there are monetary policy meetings in Brazil, Colombia, Korea and Kazakhstan.

Watch Fed minutes for more clarity on March FOMC

The minutes of the February 1st FOMC meeting are likely to reveal that Fed officials have become increasingly constructive on the outlook for the economy. There will likely be a mention of the meaningful improvement in business and consumer sentiment surveys. The FOMC is also expected to note that the labor market is likely close to full employment and that signs of underutilization have diminished. Finally, there could be some mentions of concern over “external” developments. Any discussion about the Fed’s balance sheet should also garner interest: recent comments from Fed officials suggest there being an increasing debate about the future of the Fed’s balance sheet.

Eurogroup meets on Greek economic adjustment program

Grexit is back, though as a tail risk. If all three sides insist on their red lines, the logical outcome would be Grexit. While this would likely not be in the political interest of either Greece or the creditors, markets could become nervous as we approach the July maturities (€6bn excluding bills). There is also a high risk of a snap election which initially could be market negative, but ultimately lead to a more stable government.

The week ahead in Emerging Markets

There will be monetary policy meetings in Brazil, Colombia, Korea and Kazakhstan. Brazil’s BCB is expected to cut the Selic rate by 75bp.

In other data

  • In the US, focus is largely on the Feb FOMC Minutes. Also due are home sales data along with a wide range of Fed speakers currently on schedule.
  • In the Eurozone, meaningful releases include consumer confidence and PMIs.
  • In the UK, data about public sector finances and GDP is on deck.
  • In Japan, the main data releases include trade balance and PMIs
  • In Australia, we get RBA minutes for February along with wage price index and construction data. Nothing major due from New Zealand.

A daily breakdown of key events from Deutsche Bank:

To this week’s calendar now. With the US on holiday for President’s Day (and markets subsequently closed) the data this morning is reserved for Europe where we’ll get PPI in Germany and CBI selling prices data in the UK. Euro area consumer confidence data will also be released.

Kicking things off on Tuesday will be Japan where we get the flash February manufacturing PMI. It’ll be all about the PMI’s in the European session too with flash manufacturing, services and composite readings all due. We’ll also get CPI in France and public sector net borrowing data in the UK. In the US we’ll also get the three flash PMI readings.

In the Asia session on Wednesday the lone data release is property prices data in China. Over in Germany we’ve got the IFO survey results for February as well as preliminary Q4 GDP for the UK, along with the various growth components. The final January CPI figures for the Euro area will also be watched. In the US on Wednesday the lone data is January existing home sales, while we’ll also get the FOMC minutes from the January meeting.

Thursday kicks off with more GDP data, this time the final January report in Germany while we’ll also get confidence indicators out of France. In the US data due includes initial jobless claims, FHFA house price index and Kansas City Fed’s manufacturing survey.

There’s nothing of note in Europe on Friday while in the US we’ll get new home sales and the University of Michigan consumer sentiment reading.

Away from the data the Fedspeak this week consists of Kashkari, Harker and Williams on Tuesday, Powell on Wednesday and Lockhart on Thursday. Another focus for markets will be today’s Eurogroup meeting where finance ministers are due to discuss Greece’s bailout situation. Also of note today is the House of Lords commencing a two-day debate on the draft law passed in the House of Commons with a vote due on Tuesday. BoE Governor Carney is also due to testify before UK Parliament on Tuesday.

A tabular summary of key events courtesy of SocGen

Finally, here is commentary from Goldman of all key US events, together with consensus estimates:

Monday, February 20

  • President’s Day. US markets are closed.

Tuesday, February 21

  • 08:50 AM Minneapolis Fed President Kashkari (FOMC voter) speaks:Minneapolis Fed President Neel Kashkari will give a speech on the US economy and the role of the Federal Reserve to the Financial Planning Association of Minnesota in Golden Valley, Minnesota. Audience Q&A is expected.
  • 09:45 AM Markit Flash US Manufacturing PMI, February preliminary (consensus 55.2, last 55.0)
  • 09:45 AM Markit Flash US Services PMI, February preliminary (consensus 55.8, last 55.6)
  • 12:00 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at the Wharton School of the University of Pennsylvania. Audience and media Q&A is expected.
  • 03:30 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give a presentation on economics to students at Boise State University.

Wednesday, February 22

  • 10:00 AM Existing home sales, January (GS +2.0%, consensus +0.9%, last -2.8%): We look for a 2.0% rebound in January existing homes sales, following last month’s 2.8% decline. Regional housing data released so far suggest sequential improvement in closed homes sales, consistent with the 1.6% rise in December pending homes sales (which represent contract signings). Existing homes sales annual revisions are also scheduled to be released. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.
  • 01:00 PM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will give a speech on the economic outlook and monetary policy at the Forecaster’s Club of New York’s luncheon at the Cornell Club in New York. Audience Q&A is expected.
  • 02:00 PM FOMC Minutes from the January 31-February 1 meeting: The FOMC kept policy rates unchanged at its January meeting and made few revisions to its statement, which described the economy as expanding “at a moderate pace” and characterized job growth as “solid.” In the minutes, we will look for any hints about the timing of the next hike as well as any comments about the FOMC’s evolving expectations for fiscal policy under the new administration.

Thursday, February 23

  • 08:30 AM Initial jobless claims, week ended February 18 (GS 240k, consensus 241k, last 239k); Continuing jobless claims, week ended February 11 (consensus 2,065k, last 2,076k): We expect initial jobless claims to edge up by 1k to 240k. The ongoing improvement in jobless claims provides additional evidence of underlying improvement in the pace of layoffs, and we also note the year-to-date improvement in several energy-producing states. Accordingly, we expect the pace of layoffs to remain low.
  • 09:00 AM FHFA house price index, December (last +0.5%): The FHFA house price index has a wider geographic coverage than the S&P/Case-Shiller home price index, but is based only on properties financed with conforming mortgages. On a year-over-year basis, FHFA home prices rose at a 6.1% pace in November.
  • 11:00 AM Kansas City Fed manufacturing index, February (last +9)

Friday, February 24

  • 08:35 AM Atlanta Fed President Lockhart (FOMC non-voter) speaks: Atlanta Federal President Dennis Lockhart will speak on his tenure at the Fed during the bank’s 2017 Banking Outlook Conference. President Lockhart will be officially leaving his post on February 28.
  • 10:00 AM New home sales, January (GS +9.5%, consensus +6.5%, last -10.4%): We expect new home sales to rebound 9.5% in January, mostly reversing a 10.4% drop last month that we believe was partially driven by unseasonably high snowfall in the Midwest. We expect a favorable fundamental backdrop and the elevated level of single-family building permits to mitigate the negative impact of higher mortgage rates on new homes sales activity.
  • 10:00 AM University of Michigan consumer sentiment, February final (GS 96.2, consensus 96.0, last 95.7): We expect the University of Michigan consumer sentiment index to rebound 0.5pt to 96.2 in the February final estimate, reflecting improvement among more timely measures of consumer confidence as well as the favorable stock market performance over the last two weeks. The University of Michigan’s survey of 5- to 10-year ahead inflation expectations fell 0.1pp to 2.5% in the preliminary February reading but remains above the record low of 2.3% in December. We expect this measure to remain stable or edge up in the final reading.

Source: BofA, DB, SocGen, GS

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