The Week Ahead: The Fed Acts (maybe)

The Federal Open Market Committee meets this week, the first such gathering since the election, to announce its decision on interest rates: Raise them, or let them stand?

The markets are anticipating a rate increase to an extraordinary degree, but seriously, how often the Fed dashed our expectations before?

The Fed announcement will happen Wednesday at 2 p.m. New York time, along with the the release of member forecasts. Fed Chair Janet Yellen’s news conference follows at 2:30 p.m.

And meanwhile, the beat goes on, with quite a few economic reports of note due out during the week, although they will doubtless be drowned out by the uproar over the Fed.

Prices — inflation vs. deflation — take center stage on Wednesday with the producer price index and on Thursday with the consumer price index, each at 8:30 a.m.

Retail sales will be published on Wednesday at 8:30 a.m., and industrial production follows the same day at 9:15 a.m.

Housing starts statistics will be announced on Friday at 8:30 a.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment from the jobless claims report at 8:30 a.m. Thursday.

Building permits for new private homes from the housing starts report at 8:30 a.m. Friday.

 

 

Events arranged by day:

 

Monday: The Treasury budget at 2 p.m.

Tuesday: Import and export prices at 8:30 a.m.

Wednesday:  Producer prices and retail sales, each at 8:30 a.m., industrial production at 9:15 a.m., business inventories at 10 a.m., petroleum inventories at 10:30 a.m., the FOMC announcement and forecasts at 2 p.m. and Fed Pres. Yellen’s news conference at 2:30 p.m.

Thursday:  The consumer price indexjobless claims, the Philadelphia Fed business outlook survey for the mid-Atlantic region and the Empire State manufacturing survey of conditions in New York, all at 8:30 a.m., the Home Builders housing market index at 10 a.m., Treasury international capital movements into and out of the U.S. at 4 p.m. and the M2 money supply at 4:30 p.m.

Friday: Housing starts at 8:30 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.92%, up nine  basis points from a week earlier.

Treasury Debt

Bills

  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday
  • 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m., settlement Thursday.
  • 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m., settlement Thursday.

Notes

  • 3-year: Auction Monday 1 p.m., settlement Thursday.
  • 10-year: Auction Monday 1 p.m., settlement Thursday.

Bonds

  • 30-year: Auction Monday 1 p.m., settlement Thursday.

TIPS

  • 5-year: Announcement Thursday 11 a.m.

Fedsters

One of the Fed glitterati cautiously pokes his head from the prairie dog village of monetary policy. Richmond Fed Pres. Jeffrey Lacker, who has no position on the FOMC this year, makes a public appearance on Friday.

Thought

 

Slight was the thing I bought,
Small was the debt I thought,
Poor was the loan at best—
God! but the interest!
Paul Lawrence Dunbar, The Debt (1903)

 

Tim Bovee, Portland, Oregon, Dec. 10, 2016

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s