Sunday, September 25, 2016

The Week Ahead: GDP, Homes, Durables, Trade, Income & a Flood of Fed Officials

Gross domestic product for the 2nd quarter gets its third and final estimate on Thursday at 8:30 a.m. New York time.

The report will contain two of the measures the Federal Open Market Committee considers in deciding whether raise the federal funds rate, economic growth -- the GDP itself -- and inflation, as measured by the GDP report's deflator, statistic the FOMC is said to prefer to the headline-generating consumer price index.

Otherwise, four major economic reports, each in a separate area of the economy, will help shape the narrative of the market during the week.

In real estate, new home sales will be published on Monday at 10 a.m. New York time.

In manufacturing, look for durable goods orders, out Wednesday at 8:30 a.m.

Global trade has its moment on Thursday with the release of international trade in goods at 8:30 a.m.

And the American consumer takes center stage with the release of personal income and outlays on Friday at 8:30 a.m.

Fed Chair Janet Yellen has two appearances during the week.

On Wednesday at 10 a.m. she testifies about supervision and regulation  before the House Committee on Financial Services.

On Thursday she takes part in a forum for minority banking sponsored by the Kansas City Federal Reserve Bank, at 4 p.m. New York time.

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.

The index of consumer expectations from the University of Michigan consumer sentiment survey at 10 a.m. Friday.

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Events arranged by day:

Monday: New home sales at 10 a.m. and the Dallas Federal Reserve manufacturing survey at 10:30  a.m.

Tuesday: The S&P Case-Shiller home price index for 20 metropolitan areas at 9 a.m. and consumer confidence at 10 a.m.

Wednesday: Durable goods orders at 8:30 a.m. and petroleum inventories at 10:30 a.m.

Thursday:  GDP, international trade and jobless claims, each at 8:30 a.m., pending home sales at 10 a.m. and the M2 money supply at 4:30 p.m.

Friday: Personal income and outlays at 8:30 a.m., the Chicago Purchasing Managers index at 9:45 a.m. and consumer sentiment at 10 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 1.46%, up eight basis points from a week earlier.

Treasury Debt

  • 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.
  • 2-year: Auction Monday 1 p.m., settlement Friday.
  • 2-year floating rate: Auction Wednesday 11:30 a.m., settlement Friday.
  • 5-year: Auction Tuesday 1 p.m., settlement Friday.
  • 7-year: Auction Wednesday 1 p.m., settlement Friday.
  • None.

  • 10-year: Settlement Friday.


In addition to Fed Chair Janet Yellen, whose appearances are described among the major economic events, three other high Fed officials stationed in Washington will also make appearances.

Fed Vice Chairman Stanley Fischer speaks at the Howard University Economic Convocation  in Washington on Tuesday at 11:15 a.m. His topic: Why study economics?

Fed Gov. Daniel Tarullo discusses the next steps in the evolution of stress testing at the Yale School of Management Leaders Forum in New Haven, Connecticut on Monday at 11:45 a.m.

Fed Gov. Jerome Powell  speaks on trends in community bank performance over the past 20 years at the Fourth Annual Community Banking Research and Policy Conference at the St. Louis, Missouri Federal Reserve Bank on Thursday at 10 a.m. New York time.

Yellen and the governors are members of the Federal Open Market Committee, which sets monetary policy.

Other FOMC members taking the podium are St. Louis Fed Pres. James Bullard  and Cleveland Fed Pres. Loretta Mester, both on Wednesday, and Kansas City Fed Pres. Esther George on Wednesday and Thursday.

Four FOMC alternates will speak: Minneapolis Fed Pres. Neel Kashkari on Monday and Wednesday, Dallas Fed Pres. Robert Kaplan on Monday, Chicago Fed Pres. Charles Evans on Wednesday and Philadelphia Fed Pres. Patrick Harker on Thursday.

Atlanta Fed Pres. Dennis Lockhart makes an appearance on Thursday. He has no position on the FOMC this year.


BENE GESSERIT LITANY AGAINST FEAR: I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.

--Frank Herbert, "Dune" (1965)

-- Tim Bovee, Portland, Oregon, Sept. 25, 2016


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
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