By Theresa Sheehan
PRINCETON (SMRA) – All the economic data of significance is
clustered in the Tuesday-Wednesday period in the short week ahead with a
few reports moved due to the holiday schedule.
The week ahead is, of course, effectively a three-day week with the
Thanksgiving Day observance and an unofficial market holiday on Friday.
The Federal government is closed on Thursday, but not Friday. However,
outside of the retail sector, many workers take a vacation day, and
business and government staffing is minimal. The bond market will not
close early on Wednesday, but it will on Friday.
The FOMC meeting minutes were also rescheduled to Tuesday from
Wednesday to accommodate holiday calendars.
On Tuesday, the data leads off with the second estimate of third
quarter GDP at 8:30 ET. There may be an upward revision as consumer
spending was a bit stronger, net exports a bit narrower, and inventories
bit higher. However, it should not look fundamentally different from the
advance estimate.
The Richmond Fed’s Survey of Manufacturing for November will be
released at 10:00 ET on Tuesday. The New York Fed’s general activity
index in the Empire State Survey plunged back into negative territory on
weak new orders. The Philadelphia Fed’s Business Outlook and general
activity index did the opposite and turned in a solid expansionary
reading. The Richmond District has tended have stronger index readings
than most other Districts over the course of the recovery, and we expect
it to agree more with Philadelphia’s outlook.
The NAR’s report on sales of existing homes in October at 10:00 ET
on Tuesday could show another uptick in levels of resales. Mortgage
interest rates continued to reach new lows in October, supplies of homes
were plentiful, prices were moderate, and if the unemployment rate was
no better, it was also no worse. Those who can afford to buy a home will
find it a favorable time.
The BLS will release two separate labor market reports for October
at 10:00 ET on Tuesday. The data for mass layoff activity should
continue to reflect very low levels of layoffs. Employers are reluctant
to lose skilled workers, and payrolls that were deeply pared in early
2009 have yet to recover. The numbers for state and regional
unemployment will provide some detail for the data behind the national
unemployment rate of 9.6%.
On Wednesday, initial claims for the week ended November 20 will be
out at 8:30 ET. New claims are slowly heading lower, if somewhat
unevenly. Claims for continuing and extended benefits are taking
somewhat larger strides in declines, but remain elevated, as do initial
claims. If Congress extends benefits again, these decreases could wane.
New orders for durable goods in October at 8:30 ET will probably
swing on the transportation component again. Although Boeing reported a
strong 108 new orders for the month, it was down from 117 in the prior
month. Demand for new motor vehicles may make up at least some of the
difference, but probably not all.
Personal income and spending for October at 8:30 ET will likely
reflect some modest gains in income and more robust consumption
expenditures, particularly for durable goods as car sales were stronger
in October.
The final reading of the Reuters/University of Michigan Consumer
Sentiment Index is expected at 9:55 ET. The preliminary report printed a
reading of 69.3, an increase of 1.6 points from October. The index may
be revised lower due increases in some consumer items like gasoline and
foods, and market volatility associated with a more uncertain outlook.
Sales of new single-family homes in October could continue along
the same trend that has been in place since May. The level has hovered
between the high 200,000’s and low 300,000’s. This segment of the
housing market will have to continue to contend with abundant supplies
of bargain priced foreclosures and short sales on the market.
The FHFA House Price Index for September at 10:00 ET should
indicate that home prices continued to gain on a year-over-year basis,
although it is likely to be a very slender increase for the month. Home
values were much more stable as the third quarter came to a close.
US Treasury Auctions
New 2-, 5-, and 7-year notes will be auctioned Monday through
Wednesday, respectively. All will settle on November 30. There will be
no coupon offerings until the next leg of the quarterly refunding of new
3-year notes, and reopenings of the 10-year notes and 30-year bonds on
December 2.
With the impending holiday, Fed officials speaking in public will
be few and far between. So far the only speech scheduled next week is
that of Minneapolis Fed President Kocherlakota on Monday. The rhetoric
around the Fed’s large-scale asset purchase program has ensured that the
Fed will need to continue to communicate on its intentions in providing
economic stimulus, and reassurance that the long-term impacts and
consequences have been fully considered and prepared for.
There is one more FOMC meeting in 2010 on December 14. The one
after that is on January 25-26 and will see the next rotation of the
FOMC voters.
The FOMC meeting minutes for November 2-3 were rescheduled to 14:00
ET Tuesday from Wednesday to accommodate holiday calendars. Markets will
be looking for the direction of the arguments for and against the
large-scale asset purchase program, and what, if anything, was the
deciding factor in favor of its implementation. There may also be some
additional detail regarding the inflation communication.
** Stone & McCarthy Research Associates **
[TOPICS: M$$FI$,M$U$$$,MAUDS$]
