Key Events In The Coming "Fed Rate-Hike" Week

Tyler Durden's picture

The key economic releases this week are retail sales on Wednesday and CPI on Thursday. The key market-moving event will be the December FOMC statement released on Wednesday at 2PM. In addition, there is one scheduled speaking engagement by Richmond Fed President Lacker on Friday.

On to the main event this week, which will be the likely second US rate hike (Wednesday) in this cycle 10 and a half years on from the last hike in the previous cycle. As DB's Jim Reid calculates, we've seen over 670 rate cuts globally since the GFC but not much more than a handful of hikes. So this is a pretty monumental event. Yellen’s words will be the most closely watched part of the day but it would be a surprise if she deviated too far from her remarks to Congress back on November 17th with perhaps the key message being that it was too early for her to judge the impact of President-elect Trump's potential fiscal plans. With little additional info to add on this since the testimony she's unlikely to rock the boat. Whether other members feel the same will be unveiled in the dots. So keep an eye out for that. We'll preview in full on Wednesday.

There's a fair amount of US data alongside the FOMC this week. Given the ECB meeting last week and the recent run up in oil we'll be particularly interested in CPI on Thursday. The reason we mention the ECB and oil is that the discussion within DB research last week was how crucial oil has been to the ECB's policy in recent years (the hike in 2011 and negative rates and QE more recently) and how we may have to watch it in 2017 for any signs that the taper announced last week looks set to go much further in 2018. Obviously the opposite could also happen but the news over the weekend that non-OPEC countries have joined in with production cuts makes things interesting.

* * *

A look at key events on a daily basis, courtesy of DB:

  • It’s a quiet start to the week today. There’s no notable data to highlight in Europe while the sole release in the US is the November monthly budget statement.
  • Tuesday morning kicks off in China where we’ll get the November industrial production, retail sales and fixed asset investment data. In Europe we’ll get final November CPI revisions in Germany, last month’s inflation report for the UK, Euro area employment data for Q3 and the ZEW survey in Germany. In the US the import price index reading for last month will be out.
  • Japan gets things going on Wednesday where all eyes will be on the Q4 Tankan survey. There are a few notable reports in Europe including the final November CPI report in France, the latest employment report in the UK and also retail sales data for the Euro area. It’s busy in the US on Wednesday. We’ll get November retail sales data, PPI, industrial and manufacturing production, business inventories and then of course later in the evening concluding with the FOMC rate decision and also the updated Fed dot plots.
  • Thursday is PMI day where we’ll get the flash December manufacturing, services and composite readings in Europe. Thereafter, UK retail sales data for last month will be released before we turn over to the BoE policy meeting outcome just after midday. In the US it’s another important day for data with the November CPI report being the focus. Also due out is empire manufacturing, initial jobless claims, Philly Fed survey, flash manufacturing PMI and NAHB housing market index.
  • We close the week out in Europe on Friday with the final revisions to the November CPI report for the Euro area, along with various confidence indicators in France and CBI trends orders data for the UK. In the US we’ll get housing starts and buildings permits data.

Away from the data the Fedspeak this week comes on Friday when Lacker is due to speak in the evening. Fed Chair Yellen will of course also be hosting a press conference following the FOMC outcome on Wednesday. Other potentially interesting events include a meeting of EU leaders on Thursday to discuss migration issues and the Brexit process and a meeting between Japan PM Abe and Russia President Putin the same day.

* * *

And a full breakdown together with consensus estimates of all upcoming US events from Goldman:

Monday, December 12

  • 02:00 PM Monthly budget statement, November (consensus -$135.0bn, last -$44.0bn): Consensus expects the federal budget balance to decline to -$135.0bn in November.

Tuesday, December 13

  • 08:30 AM Import price index, November (consensus -0.4%, last +0.5%): Consensus expects the import price index to decrease by 0.4% in November. In October, the headline index advanced 0.5%, boosted by higher fuel prices.

Wednesday, December 14

  • 08:30 AM Retail sales, November (GS +0.3%, consensus +0.3%, last +0.8%); Retail sales ex-auto, November (GS +0.4%, consensus +0.4%, last +0.8%); Retail sales ex-auto & gas, November (GS +0.3%, consensus +0.4%, last +0.6%); Core retail sales, November (GS +0.3%, consensus +0.4%, last +0.8%) We expect headline retail sales to rise 0.3% driven by a modest increase in gasoline prices and solid holiday sales trends, particularly online. Control retail sales are forecasted to increase by 0.3% following a 0.8% gain in the October report. We look for a retrenchment and/or negative revisions in the pharmacy category (11% of retail control) in light of increased prescription drug discounting and generic market-share gains.

    08:30 AM PPI final demand, November (GS +0.1%, consensus +0.1%, last flat); PPI ex-food and energy, November (GS +0.2%, consensus +0.2%, last -0.2%); PPI ex-food, energy, and trade, November (GS +0.2%, consensus +0.1%, last -0.1%): We expect PPI to increase 0.1% in November, following a softer than expected October report, in which higher energy prices were offset by lower food prices and soft core inflation.

    09:15 AM Industrial production, November (GS -0.5%, consensus -0.1%, last flat); Manufacturing production, November (GS -0.3%, consensus -0.2%, last +0.2%); Capacity utilization, November (GS 74.9%, consensus 75.1%, last 75.3%): We expect industrial production to decline by 0.5% (mom) in November following a slightly softer than anticipated October report in which weakness was concentrated in the weather-sensitive utilities category.

  • 10:00 AM Business inventories, October (consensus -0.1%, last +0.1%): Consensus expects a 0.1% decline in inventory levels in October.
  • 2:00 PM FOMC statement, December 13-14 meeting: We expect the committee to raise rates at the December meeting and to remain upbeat about the general outlook. Guidance from the meeting, the Summary of Economic Projections, and Chair Yellen’s testimony are likely to repeat the committee’s existing view that the pace of rate hikes will be gradual. In the Summary of Economic Projections (SEP), we look for: (1) modest upward revisions to GDP growth and lower unemployment rate projections for 2016 and 2017; (2) a one-tenth increase in core PCE for 2016 and 2017; and (3) unchanged median fed funds rate projections for 2017 and beyond.

Thursday, December 15

  • 08:30 AM CPI (mom), November (GS +0.25%, consensus +0.2%, last +0.4%): Core CPI (mom), November (GS +0.21%, consensus +0.2%, last +0.1%); CPI (yoy), November (GS +1.7%, consensus +1.6%, last +1.6%); Core CPI (yoy), November (GS +2.2%, consensus +2.1%, last +2.2%): We expect that core CPI rose by 0.21% in November or 2.2% on a year-on-year basis. In October, core CPI rose by a smaller than expected 0.15%, due to a decline in airline fares and wireless telephone prices. Headline consumer prices likely increased by 0.25% in November, after the October report showed a strong 0.4% month-over-month gain due a boost from higher energy prices. On a year-on-year basis, the headline index likely increased by 1.7%.
  • 08:30 AM Initial jobless claims, week ended December 10 (GS 250k, consensus 256k, last 258k); Continuing jobless claims, week ended December 3 (last 2,005k): We expect initial jobless claims to decrease to 250k from 258k last week. Initial claims can be difficult to seasonally adjust around this time of the year, and we see mostly seasonal noise rather than changes in underlying trends in recent claims reports.
  • 08:30 AM Philadelphia Fed manufacturing index, December (GS +10.0, consensus +9.0, last +7.6): We expect the Philadelphia Fed manufacturing survey to move up to +10.0 in December, after the index edged down in the November report. The Philadelphia Fed index remains at levels that continue to suggest healthy expansion in manufacturing activity.
  • 08:30 AM Empire manufacturing survey, December (consensus +3.0, last +1.5): Consensus expects the Empire manufacturing survey to move up to +3.0 in December, after a strong increase in the November report.
  • 10:00 AM NAHB housing market index, November (consensus 63, last 63): Consensus expects the NAHB homebuilders’ index—which we have found to be a decent leading indicator of housing starts—to remain flat at 63 for a second month, while still near post-crisis highs.

Friday, December 16

  • 08:30 AM Housing starts, November (GS -6.5%, consensus -7.0%, last +25.5%); Building permits, November (consensus -1.6%, last +2.9%): We expect that housing starts declined by 6.5% in November, following an outsized October gain of 25.5% that reflected a substantial gain in the volatile multifamily starts category as well as a solid rise in single family starts. Consensus expects new permits to soften by 1.6% in the November report after a 2.9% gain in the prior month.
  • 12:30 Richmond Fed President Lacker (FOMC non-voter) speaks: Richmond Fed President Jeffrey Lacker will participate in a panel discussion at the Charlotte Chamber of Commerce’s Economic Outlook Conference. Media Q&A is expected.

Source: DB, GS, BofA

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Beowulf55's picture

No rate increase..........not on Obummers watch...............

LawsofPhysics's picture

"once unemployment goes below 6.5% we will begin to normalize interest rates" - Ben Bernanke

Good thing the Fed is "data dependent" and "apolitical"...

"Full faith and credit" 

 

Get long sharecropping and guillotines...

TheytookERjobs's picture

Will they or will they not raise rates? That's the question

JailBanksters's picture

Rate Hike Week, ROFL, good one.

 

whatamaroon's picture

Jellen needs to raise the fed rates by at least a full percentage point so the stock market can tank, er normalize and the bond market to crash, er normalize, Then she can tell Trump, "the Russians did it"