Key Events In The Coming Week: Senate Tax Vote; Euro Inflation; GDP; OPEC, Fed Speakers

It's a busy week as traders return from the long Thanksgiving holiday, with inflation releases in the Eurozone and Japan. We'll also get the second estimate of US GDP, housing data and ISM manufacturing, UK monetary aggregates and PMIs in China. Finally, the Russia-OPEC meeting takes place in Vienna on November 30, while the Senate hearing of Fed chair nominee Powell and Yellen's testimony before Congress will be closely watched. The Senate tax vote, tentatively expected on Thursday, will be the week's key event.

With the ECB's upcoming tapering, focus will be on the Eurozone inflation print, where fueled by the recent Coeuré interview, the 5y underperformance in the rates market was indicated by some as potentially the start of some more meaningful ECB rate hike cycle pricing after 2019. While other technical factors are likely at play, an upside surprise next week could move German yields at levels (higher) more consistent with the improved economic outlook and risk sentiment. BofA economists expect next week's y/y CPI estimate at 1.7%, higher than current median expectation of 1.6%. That said, there is a long left tail in the distribution of forecasts which could make market reaction more meaningful on an upside surprise than otherwise.

In the US, the key data releases are GDP, housing data and ISM manufacturing. 3Q GDP should be revised higher in the second release, up to 3.2% from the initial estimate of 3.0%. Most of the revision could be driven by a combination of better government spending and inventory build. Also look for upticks for both construction spending and pending home sales. Finally, ISM manufacturing is expected to edge down to 58.3 from 58.7 but continue signaling expansion in the manufacturing sector.

In other data we also have personal income & spending, PCE core and a series of Fed speakers, including the Senate hearing on Fed chair nominee Powell. In the Eurozone, we also have M3 growth and unemployment rate releases. In the UK, we have PMI manufacturing, house prices, net consumer credit, mortgage approvals and consumer confidence. We also hear from BOE's Ramsden. In Japan, the main focus is on CPI, industrial production, retail sales and jobless rate. A series of BoJ speakers should also gather interest given recent "reversal rate" mentions. In China, focus is on two series of manufacturing PMIs. In Canada, GDP, unemployment rate and PMI manufacturing are in the agenda. We also hear from Bank of Canada speakers. In Australia, we receive the private capital expenditure survey, private sector credit, building approvals and house prices.

A breakdown of key events by day follows, courtesy of DB's Jim Reid

  • Monday: A fairly quiet start to the week with mostly second tier data releases including October new home sales and the November Dallas Fed manufacturing activity index in the US. The BoE’s Ramsden is scheduled to speak in the evening, followed later by the Fed’s Kashkari.
  • Tuesday: The most significant event on Tuesday will likely be Fed Reserve Chair nominee Jerome Powell’s confirmation hearing. Also worth noting is a likely meeting between President Trump and Democratic and Republican congressional leaders with the discussion expected to focus on a federal spending plan to prevent a partial government shutdown post funding expiring on December 8th. Away from this the Fed’s Dudley speaks overnight while later in the day the Fed’s Harker is due to speak. Economic releases in Europe on Tuesday include October money and credit aggregates data for the Euro area and German and  French consumer confidence. In the US the October advance goods trade balance, October wholesale inventories, September FHFA house price index, September S&P/CoreLogic house price index, November consumer confidence and November Richmond Fed manuf acturing index prints are all due.
  • Wednesday: The main focus on Wednesday will be Fed Chair Yellen’s testimony before the congressional Joint Economic Committee in Washington in the afternoon. Also worth noting is a scheduled speech from the Fed’s Williams. Datawise in Europe the big focus will be the flash November CPI report in Germany. In the US we’ll get the second reading of Q3 GDP and Core PCE. Also due out is Q3 GDP in France, October money and credit aggregates for the UK, November confidence indicators for the Euro area and October pending home sales for the US. The Fed’s Beige Book will also be out in the evening.
  • Thursday: Inflation releases highlight a busy Thursday with the October personal income and spending, and PCE deflator and core readings in the US being the main focus. In Europe we’ll also get the November CPI report for the Euro area, as well as regional reports in France and Italy. Late in the evening we’ll then get the October CPI report out of Japan. The main focus in the morning will be the official November PMIs in China. Other data releases worth noting on Thursday include November consumer confidence in the UK, November unemployment in Germany, and initial jobless claims and the November Chicago PMI in the US. Away from the data central bank speak on Thursday includes the BoJ’s Iwata and Harada, ECB’s Mersch and Fed’s Quarles and Kaplan. We also have the latest OPEC meeting in Vienna that should see supply cuts maintained and create some headline attention for Oil. Elsewhere, Germany’s Ms Merkel and SPD’s leader Mr Schultz are expected to formally meet with President Steinmeier, likely to discuss next steps on forming a new coalition government.
  • Friday: We’ll end the week in Asia with the final November manufacturing PMIs in Japan (Nikkei) and China (Caixin). In Europe the final November PMIs are due while in the US the November ISM manufacturing print will be out. November vehicle sales data in the US is also due. Also worth noting is the various Fedspeak with Bullard, Kaplan and Harker all due.

Finally, here is Goldman with a focus on US events, together with consensus estimates:

The key economic releases this week are the second vintage of Q3 GDP on Wednesday, personal income and spending on Thursday, and ISM manufacturing on Friday. There are several speaking engagements by Fed officials this week, including Jerome Powell’s confirmation hearing on Tuesday and Chair Yellen’s testimony before the Joint Economic Committee on Wednesday

Monday, November 27

  • 10:00 AM New home sales, October (GS -5.5%, consensus -6.3%, last +18.9%): We estimate new home sales pulled back 5.5% in October after surging to a cycle-high in September. We expect only a partial retracement, reflecting a continued boost from hurricane-related demand. The pickup we’ve seen in regional pending homes sales is consistent with this expectation.
  • 10:30 AM Dallas Fed manufacturing survey, November (consensus 24.0, last 21.3)
  • 06:30 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a moderated Q&A at Winona State University’s town hall in Minnesota. Audience Q&A is expected.
  • 07:00 PM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will participate in a moderated conversation on the “US Economy: 10 Years after the Crisis” at an event organized by the University of California at Berkeley in New York. Audience Q&A is expected.

Tuesday, November 28

  • 08:30 AM U.S. Census Bureau Advance Economic Indicators Report; Advance goods trade balance, October (GS -$65.0bn, consensus -$65.0bn, last -$64.1bn): We estimate the goods trade deficit widened $0.9bn to $65.0bn in October. Regional port statistics suggest some firming on export container volumes, consistent with post-hurricane improvement.
  • 08:30 AM Wholesale inventories, October preliminary (consensus +0.4%, last +0.3%)
  • 09:00 AM S&P/Case-Shiller 20-city home price index, September (GS +0.4%, consensus +0.3%, last +0.45%): We expect the S&P/Case-Shiller 20-city home price index to advance 0.4% in September, following a 0.45% increase in August. The measure still appears to be influenced by seasonal adjustment challenges, and we place more weight on the year-over-year increase, which was 5.9% in August.
  • 09:00 AM FHFA house price index, September (consensus +0.5%, last +0.7%)
  • 09:15 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President Dudley will give introductory remarks at the New York Fed’s third annual conference on “The Evolving Structure of the US Treasury Market”.
  • 10:00 AM Conference Board consumer confidence, November (GS 123.5, consensus 124.0, last 125.9): We estimate that the Conference Board consumer confidence index pulled back 2.4pt in November following a 5.3pt increase to a cycle high in October. Our forecast reflects sequential deterioration in the University of Michigan measure and in some higher frequency consumer surveys.
  • 10:00 AM Fed Governor Powell’s confirmation hearing (FOMC voter): Federal Reserve Governor Powell will appear before the U.S. Senate Committee on Banking, Housing, and Urban Affairs for his confirmation hearing for his nomination to the role of chairman. Powell’s appointment should preserve continuity at the Fed, as his stated economic and monetary policy views largely mirror those of the current leadership, in our view.
  • 10:00 AM Richmond Fed manufacturing index, November (consensus 14, last 12)

Wednesday, November 29

  • 08:30 AM GDP (second), Q2 (GS +3.5%, consensus +3.2%, last +3.0%); Personal consumption, Q2 (GS +2.4%, consensus +2.5%, last +2.4%): We expect a five-tenths upward revision in the second vintage of Q3 GDP (to +3.5% qoq saar), driven by upward revisions to inventory investment and government spending. We look for real personal consumption to be unrevised at +2.4%, though we view the risks to this forecast as skewed to the upside.
  • 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President Dudley will take part in a fireside chat on the national and regional economy at Rutgers University in New Brunswick, New Jersey. Audience Q&A is expected.
  • 10:00 AM Pending home sales, October (GS +3.0, consensus +1.1%, last flat): Regional data we collect on contract signings improved nicely in October, particularly in hurricane-affected regions. Accordingly, we estimate pending home sales rose at a solid 3.0% pace (mom sa) following a flat reading in September. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
  • 10:00 AM Federal Reserve Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will testify before the Joint Economic Committee on the economic outlook.
  • 01:50 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Federal Reserve President John Williams will give the keynote speech at the 54th Annual Economic Forecast Luncheon organized by Arizona State University in Phoenix, Arizona. Audience Q&A is expected.
  • 02:00 PM Beige Book, December FOMC meeting period: The Fed’s Beige Book is a summary of regional anecdotes from the 12 Federal Reserve districts. The October/November Beige Book noted that economic activity continued to expand across all districts, despite reports of hurricane-related disruptions in some districts. Labor market conditions were widely characterized as “tight” for the second consecutive report, and some Districts reported “stronger” wage pressures in certain sectors. In the December Beige Book, we look for additional anecdotes about the state of consumption, price inflation, and wage growth.

Thursday, November 30

  • 8:30 AM Personal income, October (GS +0.3%, consensus +0.3%, last +0.4%); Personal spending, October (GS +0.4%, consensus +0.3%, last +1.0%); PCE price index, October (GS +0.08%, consensus +0.1%, last +0.4%); Core PCE price index, October (GS +0.14%, consensus +0.2%, last +0.1%); PCE price index (yoy), October (GS +1.50%, consensus +1.5%, last +1.6%); Core PCE price index (yoy), October (GS +1.35%, consensus +1.4%, last +1.3%): We estimate a 0.4% increase in October personal spending (nominal, mom sa), reflecting further post-hurricane normalization of utility consumption partially offset by a sequential decline in auto sales and gas prices. Based on details in the GDP, PPI, and CPI reports, we estimate that the core PCE price index increased 0.14% month-over-month in October, or +1.35% from a year earlier (we see equal odds of the year-over-year rate rounding to +1.3% or +1.4%). Additionally, we expect that the headline PCE price index rose 0.08% in October, or +1.50% from a year earlier. We estimate a 0.3% increase in personal income.
  • 8:30 AM Initial jobless claims, week ended November 25 (GS 245k, consensus 240k, last 239k); Continuing jobless claims, week ended November 18 (consensus 1,888k, last 1,904k): We estimate initial jobless claims rebounded 6k to 245k in the week ended November 25 after declining sharply (from a six-week high) in the previous week. While jobless claims remain somewhat elevated in California, we note the possibility of a further rise in Puerto Rico tied to the aftermath of Hurricane Maria. The timing of the Thanksgiving holiday may also introduce seasonal adjustment difficulties. Continuing claims – the number of persons receiving benefits through standard programs – rose by more than expected in the previous week.
  • 09:45 AM Chicago PMI, November (GS 63.5, consensus 62.5, last 66.2): We expect the Chicago PMI to moderate 2.8pt to 63.5 in November following a 7.3pt cumulative gain over the prior two months. The index is likely to remain at levels consistent with solid expansion in business activity.
  • 12:30 PM Vice Chair of Supervision Quarles (FOMC voter) speaks: Vice Chairman of Supervision Randal Quarles will give a speech on payment systems at the Federal Reserve Bank of Cleveland and Office of Financial Research’s 2017 Financial Stability and FinTech Conference in Washington D.C. Q&A is not expected.
  • 01:00 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will participate in a moderated Q&A at the Real Estate Council’s speaking series in Dallas. Audience and media Q&A is expected.

Friday, December 1

  • 09:05 AM St. Louis Fed President Bullard (FOMC non-voter) speaks; St. Louis Federal Reserve President James Bullard will give a presentation on the US economy and monetary policy at an economic briefing in Little Rock, Arkansas. Audience Q&A is expected.
  • 09:30 AM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Federal Reserve President Robert Kaplan will take part in a moderated Q&A session at the “Border Economic Development and Entrepreneurship Symposium” in McAllen, Texas. Audience and media Q&A is expected.
  • 09:45 AM Markit US Manufacturing PMI, November (last 53.8)
  • 10:00 AM ISM manufacturing index, November (GS 57.7, consensus 58.3, last 58.7): Regional manufacturing surveys have pulled back so far in November. Overall, our manufacturing survey tracker moved up 2.0pt to 58.5 in November. We expect the ISM manufacturing index to decline 1.0pt to 57.7, but it will likely remain at levels consistent with a firm pace of expansion in business activity.
  • 10:00 AM Construction spending, October (GS +0.6%, consensus +0.5%, last +0.3%): We expect construction spending to strengthen in October following a 0.3% gain in September, mostly reflecting a post-hurricane rebound in construction activity
  • 05:00 PM Total vehicle sales, November (GS 17.7mn, consensus 17.5mn, last 18.0mn): Domestic vehicle sales, November (GS 13.6mn, consensus 13.4mn, last 14.0mn)

Source: BofA, DB, Goldman