Today's Economic Docket: FOMC Conference And Durable Goods
With all eyes focused on the Fed's largely irrelevant first ever presser, during which only "Congressionally accredited" journalists will "ask" questions, we also get durable goods which we anticipate will confirm the recent downward economic trend indicated by the Dallas and Richmond Feds, as well as all the horrendous double dipping housing data.
8:30: Durable goods orders (March): Rebound after weakness. We [Goldman] forecast that new orders of durable goods increased by 3.0% mom in March after declining by 0.6% (revised) in February. Importantly, we expect that “core” orders (non-defense capital goods orders excluding aircraft) picked up after a two-month slump. The weakness in capital goods orders looked puzzling in light of strong business surveys and healthy growth in industrial production of business equipment. We therefore think a sizable payback looks likely.
GS: +3.0%; median forecast (of 74): +2.3%; Last: -0.6%.
11:30: 5 Year auction ends early to accomodate new FOMC release schedule
This afternoon, Fed Chairman Bernanke will hold his first public press conference following the regular meeting of the Federal Open Market Committee (FOMC). With regard to the major policy decisions, we expect: (1) that the post-meeting statement will retain the “extended period” language, but that it may drop an earlier comment that the recovery is “on a firmer footing”; (2) that the FOMC will clarify that it intends to complete its $600bn Treasury purchase program in June; and (3) that the committee will cut its forecasts for growth, but raise it forecasts for core inflation. In the press conference we expect that the Chairman will sound more cautious on the outlook but also emphasize that Fed officials are monitoring inflation expectations closely.
Below is an expected timeline of events, reproduced from Monday’s US Daily:
12:30pm – FOMC statement released.The Fed’s website gives the time as “around 12:30pm”, which will come as no surprise to Fed watchers used to twiddling their thumbs for several minutes after the scheduled release time. (Just to keep market participants on their toes, the statement does occasionally come out a minute or two before the scheduled time.)
2:15pm – Press conference begins. We expect Fed Chairman Bernanke to make an introductory statement which will feature the FOMC’s projections for growth, unemployment and inflation (but probably not the detailed distribution of these forecasts nor discussion of the staff’s forecasts). An article published today on the Wall Street Journal website (“Federal Reserve Irons Out Details of Post-Meeting Press Conference”, by Jon Hilsenrath) implied that any introduction is likely to be very short. According to the article, additional published information on the FOMC forecasts, along the lines of Table 1 in the Fed minutes from the January 25-26 meeting, will be made available on the Fed website at this time. Assuming this is correct, it would imply that detailed information on the distribution of forecasts, and on the staff’s economic forecasts, would not be revealed until the publication of the minutes (though of course these subjects could surface during the question and answer session).
ca. 2:25pm – Question and answer session begins.This is a live session with journalists, who are likely to be well prepared with probing questions. The questions have not been submitted to the Fed in advance.
Sometime around 3pm or slightly after – Press conference ends.The typical length of an ECB press conference in recent years has been about 45 minutes, perhaps a little longer recently. The aforementioned WSJ article suggested a similar length for the Fed’s first conference.