Today's Economic Data Highlights - Fasten Your Seatbelts
Fasten your seatbelts…
8:15: Federal Reserve Chairman Ben Bernanke speaks on objectives and tools of monetary policy….With markets widely expecting another round of quantitative easing given the Fed’s rhetoric since the last FOMC meeting, this speech opening a Boston Fed conference on monetary policy shapes up as one of the most important of Chairman Bernanke’s tenure. The title—Monetary Policy Objectives and Tools in a Low-Inflation Environment—suggests a thematic approach, in which he will likely discuss various options, including targeting price levels and perhaps also nominal GDP as well as asset purchases, even though the targeting approaches have little likelihood of adoption in the near term. We have advocated his discussing optimal policy models, which currently suggest that the FOMC should and would push the funds rate well below zero if it could, as discussed most recently in last night’s daily comment. It’s not at all clear he will do this, but such models are likely to come up later in the conference as John Williams, research director at the San Francisco Fed, where research of this nature has been done, is scheduled to speak at 11:00 am.
8:30: Retail sales for Sep…another modest increase? Retailers reported another month of decent year-to-year gains in business, and vehicle sales rose modestly as well.
On total sales, GS: +0.6%; median forecast (of 80): +0.4%, ranging from -0.1% to +0.8%; last: +0.4%;
On sales ex autos, GS: +0.6%; median forecast (of 75): +0.3%, ranging from -0.4% to +0.6%; last +0.6%.
8:30: Consumer price index for Sep….Energy and food prices both helped pull the headline PPI up. We expect the same for energy (+1%) but not necessarily for food (+0.1%). The core index is also apt to remain low.
On headline, GS: +0.18%; median forecast (of 79): +0.2%, ranging from +0.1% to +0.4%; last +0.25%.
On core, GS: +0.10%; median forecast (of 78): +0.1%, ranging from flat to +0.2%; last +0.05%.
8:30: Empire Index for Oct…what’s under the hood? Given its post position in the line-up of Fed business indexes, this report will set the tone for industrial conditions in October. As usual, the details are as important as the headline index, which is not a composite. In the September report, indexes of new orders and shipments reversed some but not all of the sharp setbacks reported for August. However, the general pattern in recent months has been one of weakening, and we would expect this report to be consistent with those trends.
Median forecast (of 50): +6.0, ranging from zero to +12.5; last +4.10.
10:00 (9:55 to subscribers): Reuters/University of Michigan consumer sentiment for Oct (prelim)…slight uptick? This index has chanced little over the past three months after a setback in July. Analysts anticipate a slightly better reading for early October, but not a break-out. The median expectation for inflation five to ten years ahead remains in a tight 2.7%-2.9% range (since November), with the latest reading at 2.7%.
Median forecast (of 65): 68.9, ranging from 64.4 to 73.5; last 68.2 (Sep final).
10:00: Business inventories for Aug…another upside surprise? Some deceleration is likely from the sharp increase reported for July. The median forecast implies a 0.6% increase in retail inventories given the data that have already been reported for manufacturing (+0.1%) and wholesale (+0.8%).
Median forecast (of 50): +0.5%, ranging from flat to +0.7%; last +1.0%.
11:00: Permanent Open Market Operation... The Fed will purchase treasuries dated between 10/31/2014 – 9/30/2016. The amount will be approximately $3 billion.
12:30: Former Fed Vice Chairman Donald Kohn speaks on the economy…We don’t normally highlight speeches by former officials, but on a day when Chairman Bernanke is giving an important speech on monetary policy, the views of his former lieutenant may be of more than passing interest.
14:00: The US budget balance for Sep…another modest year-to-year improvement. The CBO estimates that the US Treasury ran a $32bn deficit in September, which would mean a deficit of $1.291trn for FY 2010 as a whole. The CBO’s estimate is rarely more than a few billion dollars off, which is why it is now also the median forecast.
Median forecast (of 25) -$32.0bn, ranging from -$69bn to -$30bn; last (Sep 2009): -$46.6bn.
from Goldman Sachs and Zero Hedge