It’s a relatively quiet, holiday-shortened (in the US) week, in which volumes are expected to grind lower as we head into the Thanksgiving holiday.
In the US, existing home sales will be reported on Tues, expected to edge up to 5.4mn saar in Oct from 5.39mn in Sep. One day later, we get the durable goods orders (exp. increase to 0.3% in Oct, slowing from 2.0% in each of the previous two months). Also on Wednesday, the FOMC minutes should reveal a committee that is preparing for another hike before year-end with a generally upbeat assessment of the economy. Chair Yellen will offer remarks in a conversational setting with former Governor of the BOE Mervyn King on Tues.
Elsewhere, on Wed, U.K. Chancellor Hammond presents the UK budget to parliament. A worsening fiscal outlook in the Budget on productivity forecast downgrades and pressure to ease austerity will likely mean an early end to the BOE’s tightening plans. BofA forecasts a cumulative increase of £46bn in borrowing between 2017-2021. In the short term the news on borrowing should be positive, reflecting recent resilient tax revenues. In the medium term productivity misery dominates. Risks are skewed to more fiscal worsening in future budgets.
Here is a breakdown of key global events on a day to day basis, courtesy of DB’s Jim Reid
- Monday: The main focus on Monday will likely be the EU foreign and European affairs ministers discussing Brexit, followed by a briefing from the bloc’s chief negotiator Michel Barnier. The location for the European Banking Authority is also to be decided. Away from that, ECB President Mario Draghi is scheduled to attend a hearing at European Parliament in the afternoon, while the ECB’s Nowotny, Lautenschlaeger and Constancio are also due to speak through the day. The only data release of note is the US conference board’s leading index for October.
- Tuesday: Central bank speakers will likely be the centre of attention again with Fed Chair Yellen due to speak late in the evening as part of a series with former BoE governor Mervyn King, while the ECB’s Coeure chairs a panel in Frankfurt in the afternoon. Datawise, UK public sector net borrowing and CBI trends data for October and November is due, while in the US the Chicago Fed national activity index and existing home sales data for October is due.
- Wednesday: The big focus on Wednesday in the UK will be Chancellor of the Exchequer Philip Hammond’s Budget statement in Parliament, due at midday. In the evening we will also receive the FOMC minutes from the latest monetary policy meeting. Datawise, the most significant release of note is the flash October durable and capital goods orders data in the US. The latest weekly initial jobless claims data is also due along with the final November University of Michigan consumer sentiment reading.
- Thursday: With it being Thanksgiving in the US, both bond and stock markets will remain closed across the pond. It’s a fairly packed schedule in Europe however, highlighted by the release of the November flash PMIs for the Euro area, Germany and France. The final Q3 GDP report is also due in Germany while in the UK we’ll get the second reading. ECB speakers on Thursday include Villeroy and Coeure while the ECB minutes from the last policy meeting are also due.
- Friday: A quiet end to the week. The flash November manufacturing PMI in Japan will be out overnight, while in Germany we’ll receive the November IFO survey. In the US we’ll receive the flash November PMIs. Black Friday also marks the traditional start of the US holiday shopping season. One other event potentially keeping an eye on is S&P and Moody’s scheduled sovereign rating reviews of South Africa, with the country at risk of losing its investment grade status. The ECB’s Supervisory chair Ms Nouy will also speak today.
Finally, Goldman focuses on key US events, alongside consensus forecasts.
The key economic releases this week are the minutes from the October 31-November 1 FOMC meeting and the durable goods orders report, both on Wednesday. There is one speaking engagement with Chair Yellen this week.
Monday, November 20
- There are no major economic data releases.
Tuesday, November 21
- 10:00 AM Existing home sales, October (GS +1.5%, consensus +0.2%, last +0.7%): We estimate existing home sales rose 1.5% in October (mom sa), adding to the 0.7% post-hurricane rebound that began in September. Our forecast reflects a further improvement in regional housing data tracking closed homes sales. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.
- 06:00 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will participate in a moderated conversation with Mervyn King at an event hosted by New York University’s Stern School of Business. Audience Q&A is expected.
Wednesday, November 22 :
- 8:30 AM Initial jobless claims, week ended November 18 (GS 240k, consensus 240k, last 249k); Continuing jobless claims, week ended November 11 (consensus 1,879k, last 1,860k): We estimate initial jobless claims declined 9k to 240k in the week ended November 18 after rising to a six-week high in the previous week. Our forecast reflects a likely pullback in California and New York from elevated levels, partially offset by a further rise in Puerto Rico tied to the aftermath of Hurricane Maria. Continuing claims – the number of persons receiving benefits through standard programs – fell sharply in the previous week, and are trending lower.
08:30 AM Durable goods orders, October preliminary (GS -1.0%, consensus +0.4%, last +2.0%); Durable goods orders, ex-transportation, October preliminary (GS +0.5%, consensus +0.5%, last +0.7%); Core capital goods orders, October preliminary (GS +0.3%, consensus +0.6%, last +1.7%); Core capital goods shipments, October preliminary (GS +0.3%, consensus +0.3%, last +0.9%): We expect durable goods orders to pull back 1.0% in the October report (mom sa), reflecting a drop in commercial aircraft orders and a moderate increase in core measures. Industrial production of business equipment rose a firm 0.5% in the month, and broader manufacturing trends remain solid on net, despite some modest deterioration in manufacturing surveys November-to-date. Accordingly, we forecast a 0.3% increase in both orders and shipments of core capital goods, and we estimate a 0.5% rise in durable goods orders ex-transportation.
- 10:00 AM University of Michigan consumer sentiment, November final (GS 98.3, consensus 98.0, last 97.8): We expect a modest rebound in the final reading of the University of Michigan consumer sentiment index for November (+0.5pt to 98.3), reflecting sequential improvement in higher frequency consumer surveys. The preliminary report’s measure of 5- to 10-year ahead inflation expectations remained stable at 2.5% in the preliminary reading, near the middle of its 12-month range.
- 02:00 PM Minutes from the October 31- November 1 FOMC meeting: The November FOMC meeting upgraded the growth assessment to “solid” for the first time since January 2015, but it did add that core inflation “remained soft”. In the minutes, we will look for further discussion of the growth and inflation data.
Thursday, November 23
- Thanksgiving holiday. NYSE closed. SIFMA recommends bond markets also close.
Friday, November 24
- NYSE will close early at 1:00 PM. SIFMA recommends an early 2:00 PM close to bond markets.
- 09:45 AM Markit Flash US Manufacturing PMI, November preliminary (consensus 55.0, last 54.6)
- 09:45 AM Markit Flash US Services PMI, November preliminary (consensus 55.4, last 55.3)
Source: BofA, DB, Goldman