Today's Economic Data Highlights - The Most Anticipated Day Ever
An incredibly busy day today, with labor market data, a refunding announcement, and various reports on business conditions, factory orders, and vehicle sales leading into the FOMC announcement at 2:15.
The Mortgage Bankers Association’s index of mortgage applications fell 5% last week, but the purchase loan index scratched out a 1.4% increase.
7:30: Challenger job cuts for Oct….year-to-year decline still substantial, but abating. Announced layoffs had already begun to decline by this time last year. If the October change is in line with normal seasonal patterns (a very small increase), the year-to-year figure that crosses the tape should be in the vicinity of -32%. Anything significantly deeper than that would be good news.
8:15: ADP employment report for Oct…This report (actually a forecast based on ADP data, the prior payroll change, and claims) continues to miss on the low side, by 103k last month and an average of 64k since the last procedural change in December 2008. The median forecast reflects that bias, showing only +20k against a +80k median for the private-sector component of the official data due Friday.
Median forecast (of 38): +20k, ranging from -10k to +50k; last -39k.
9:00: Quarterly refunding announcement….will they announce more TIPS auctions? We expect a package of $31bn in 3-year notes, $24bn in 10-year notes, and $16bn in 30-year bonds to raise $55bn in net cash. This represents no change in the 10s and 30s from what was auctioned back in August and a $3bn reduction in the 3-year note from that time ($1bn from last month). The statement will also address what changes, if any, are to be made in the auction schedule for TIPS; if there are any, we suspect they would go to a full monthly calendar with two 10-year notes, one 5-year note, and one 30-year bond, each being reopened twice during the year. But we are not highly confident of this.
10:00: ISM nonmfg index for Oct…will it also surprise to the upside? This index has shown more slowing in growth than its manufacturing cousin, which surprised significantly to the upside on Monday. The employment index is helpful in predicting nonfarm payrolls; in September it was 50.2.
Median forecast (of 76): 53.5, ranging from 52 to 55.2; last 53.2.
10:00: Factory orders for Sep….a modest increase. As it usually the case, we expect this report to mimic – in subdued fashion – the patterns drop already reported for durable goods bookings. For August, this means an increase in the headline, though one dominated by bookings for civilian aircraft. Data on inventories will be important as well, to see how they stack up against the assumption of a 0.7% increase built into the preliminary GDP report for the third quarter.
Median forecast (of 68) +1.6%, ranging from +0.3% to +2.4%; last -0.5%.
Late morning/early afternoon: Lightweight vehicle sales for Oct…slowly grinding higher? Anecdotal reports from the manufacturers suggest modest gains.
For total sales: GS: 12 million; median forecast (of 41): 11.8mm, ranging from 11.5mm to 12.1mm; last: 11.73mm.
For domestic only: GS: 8.9mm; median forecast (of 18): 8.9mm, ranging from 8.7mm to 9.1mm; last 8.82mm.
14:15: FOMC statement…This is one of the most previewed statements we can remember. The centerpiece will be an announcement of about $500bn in purchases of longer-term Treasury securities over roughly the next six months or an equivalent program expressed at a rate of about $100bn per month, with a clear indication in either case that more will be coming if conditions warrant. This is in addition to the reinvestment program for repayments of agency and MBS principal, which will continue to be directed to the Treasury market. The purchases are apt to tilt toward somewhat longer durations than have been done so far, though information on any such detail may come through a separate New York Fed communication.
We also would not be surprised to see the committee alter the “extended period” language in an effort to push expectations of rate increases out even farther. In the paragraphs describing recent economic and inflation developments, only a couple of tweaks appear likely—to make it clear that inflation is more than “somewhat” below the “mandate-consistent” range and to recognize that growth has not slowed further since the last FOMC meeting. President Hoenig is apt to remain the lone dissenter among the 11 members who can cast a vote at this meeting.
via Goldman Sachs