The key economic releases this week in the Thanksgiving-shortened week, are the durable goods report and new home sales on Wednesday. There are several scheduled speaking engagements from Fed officials this week. Minutes from the November FOMC meeting will be released on Wednesday.
The statement from the November FOMC meeting made the case for an upcoming rate hike, giving a strong signal that the FOMC is increasingly comfortable with hiking rates. According to the market there is a near 100% certainty of a hike in December, although the minutes may show caution from a few members and a debate over the costs and benefits of low rates.
In international markets, the focus will be on the surprising aftermath of the first round of French republican primaries, which saw Nicolas Sarzkoy eliminated, and frontrunner Alain Juppe trounced by Sarkozy's ex-PM Francois Fillon. Attention will also focus on the UK Autumn Statement and FOMC Minutes. OPEC headlines may also abound throughout the week as OPEC officials and oil ministers have meetings throughout the week in efforts to finalize an oil-supply deal before the group’s November 30 formal meeting.
BofA does not expect a large fiscal stimulus in the UK government's 23 November mid-year budget, but forecasts government borrowing to be increased by £150bn on weaker growth and overshooting borrowing this year. We estimate that discretionary stimulus will translate into less than 0.5% of GDP, as fiscal stimulus carries more risk in the context of Brexit and a large current account deficit with less funding ability.
In the Eurozone, PMIs and consumer confidence are the main releases. President Draghi presents the ECB annual report at the European Parliament and we have several other ECB speakers on the calendar.
Key events broken down by day courtesy of Deutsche Bank:
- The diary is fairly bare to start the week today with nothing of note in Europe this morning and just some second tier data in the US in the form of the Chicago Fed national activity index.
- It’s not much busier tomorrow either. The only data due out in the morning will be in the UK where we’ll get the October public sector net borrowing data along with CBI total orders and selling prices data for November, while in the US we’ll get existing home sales for October and also this month’s Richmond Fed manufacturing survey. Euro area consumer confidence will also be released on Tuesday afternoon.
- Kicking off Wednesday will be China where the MNI business indicator is due out in the morning. Over in Europe it’s PMI day with flash November services, manufacturing and composite prints due for the Euro area, Germany and France. The calendar picks up in the US on Wednesday. The most significant data is perhaps the durable and capital goods orders data for October, while initial jobless claims, FHFA house price index, flash manufacturing PMI, new home sales and the final University of Michigan consumer sentiment revision for October are due out. Later on Wednesday we’ll also get the FOMC minutes from the meeting earlier this month.
- Turning to Thursday, early in the morning Japan’s flash manufacturing PMI is due out. The focus is then on Germany where the final Q3 GDP revision will be made before we then get France confidence indicators and then the November IFO survey from Germany again. With it being Thanksgiving in the US on Thursday markets will be shut.
- Turning to Friday, the overnight data comes from Japan with the October CPI data. In the morning session we’ll then get the preliminary Q3 GDP from the UK before we finish the week in the US with the advance goods trade balance for October, wholesale inventories and the remaining flash November PMI’s (services and composite).
Away from the data there’s little in the way of Fedspeak this week aside from when Vice-Chair Fischer speaks on the topic of ‘Longer-Term Challenges for the US Economy’. Meanwhile the ECB’s Draghi also speaks today at European Parliament while Coeure and Nouy are also scheduled today. Away from that the BoE’s Haldane and Forbes speak today and tomorrow, respectively. Other key things to look out for this include today’s OPEC meeting in Vienna, UK Chancellor Hammond’s Autumn Statement on Wednesday and finally any early retail sales indicators in the US on Black Friday.
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Focusing only on the US, here is a breakdown of events and estimates courtesy of Goldman Sachs
Monday, November 21
08:00 AM Federal Reserve Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Vice Chair Stanley Fischer will participate in a discussion on monetary policy, inflation rates, and the economic outlook at the Council of Foreign Relations in New York.
Tuesday, November 22
- 10:00 AM Existing home sales, October (consensus -0.7%, last +3.2%): Consensus expects existing home sales to decrease by 0.7% after a 3.2% gain in September. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
- 10:00 AM Richmond Fed manufacturing index, November (consensus 0, last -4)
Wednesday, November 23
- 08:30 AM Durable goods orders, October (GS +1.7, consensus +1.2%, last -0.3%); Durable goods orders ex-transportation, October (GS -0.5%, consensus +0.2%, last +0.1%); Core capital goods orders, October (GS flat, consensus +0.3%, last -1.3%); Core capital goods shipments, October (GS +0.1%, consensus +0.1%, last +0.4%): We expect durable goods orders to rise 1.7%, primarily due to a boost from aircraft orders, and for core capital goods orders to be flat in October following a soft report in September. We expect durable goods orders ex-transportation to be weighed down by a stronger dollar and falling durable goods prices. October industrial production data were slightly softer than expected, and regional manufacturing surveys were mixed. We expect core capital goods shipments to increase 0.1%. Over the last year, core capital goods orders declined by 4.3%, while core capital goods shipments declined by 5.7%.
- 08:30 AM Initial jobless claims, week ended November 19 (GS 245k, consensus 245k, last 235k); Continuing jobless claims, week ended November 12 (last 1,977k): We expect initial jobless claims to increase to 245k from 235k. Initial claims declined to their lowest levels last week since the early 1970s, which may be partially due to seasonal adjustment challenges associated with the Veterans Day holiday reference week. Continuing jobless claims also fell to post-crisis lows, moving down to 1,977k.
- 09:00 AM FHFA house price index, September (consensus +0.5%, last +0.7%): Consensus expects a 0.5% gain in the FHFA house price index in September, which has risen 6.4% over the past year. FHFA home prices increased 0.7% in August, a quicker pace than expected. The FHFA house price index has a wider geographic coverage than the S&P/Case-Shiller housing price index, but is based only on properties financed with conforming mortgages.
- 09:45 AM Markit Flash US Manufacturing PMI, November preliminary (consensus 53.4, last 53.4): Details from the November Philly Fed and Empire State surveys were mostly better, following mixed reports from regional manufacturing surveys in October. We find that the flash Markit PMI does contain some predictive power for the ISM.
- 10:00 AM New home sales, October (GS flat, consensus -0.2%, last 3.1%): We expect new home sales to remain flat in October. New home sales are highly volatile on a month-to-month basis. Single-family and multi-family housing starts rose sharply in the October report, although building permits were little changed on net.
- 10:00 AM University of Michigan consumer sentiment (final), November (GS 91.2, consensus 91.6, last 91.6): We expect the University of Michigan consumer sentiment gauge to edge down to 91.2 in the final November report following a larger than anticipated increase to 91.6 in the preliminary report.
- 02:00 PM Minutes from the November 1-2 FOMC meeting: The November FOMC meeting statement again described risks to the economic outlook as “roughly balanced” with only the need to see “some” further improvement in the economy before hiking. In the minutes, we will be watching for any further indications about the likelihood of a rate hike in December.
Thursday, November 24
- Thanksgiving holiday. NYSE closed. SIFMA recommends bond markets also close.
Friday, November 25
- NYSE will close early at 1:00 PM. SIFMA recommends an early 2:00 PM close to bond markets.
- 08:30 AM Advanced goods trade balance, October (GS -$60.2bn, consensus -$59.0bn, last -$56.1bn); Last month, the Census Bureau’s Advance Economic Indicators report showed a smaller than anticipated trade deficit and moderate inventory accumulation in the retail and wholesale sectors. We expect the trade deficit to widen slightly in October.
- 08:30 AM Wholesale inventories, October preliminary (consensus +0.2%, last +0.1%)
- 09:45 AM Markit Flash US Services PMI, November preliminary (consensus 54.7, last 54.8)
Source: Goldman, BofA, DB