Thursday's Morning Briefing

Thursday's Morning Briefing

Yesterday’s FOMC minutes caused quite a market reaction. What does the calendar tell us today?

Thursday's Morning Briefing
Thursday's Morning Briefing RawPixel.com via StockSnap

In yesterday's article, we noted that the primary focus of the day would be the FOMC minutes from January, and those looking to trade that price action in the U.S. equity markets saw a big move following the 2:00 p.m. EST release.

Goldman Sachs' chief economist Hatzius put out a note in response to the FOMC minutes indicating that Goldman now projects a single rate hike in 2019. However, the CME’s Fed Funds Rate futures still suggests an 85% likelihood that rates will remain unchanged for this year and projects an equal chance for a rate drop as for an additional hike.

Another opinion came from SEB, a bank in Europe, noted that the Fed gave a very dovish surprise in those minutes, removing references to forward guidance and adding the word “patient” to the statement. This dovish outlook was due to a growing concern for the U.S. economy over systemic risks from a European and Chinese slowdown as well as uncertainty surrounding the U.S. government shutdown. SEB believes that there will be one final rate hike this year and notes that “a lot of recent indicators of economic activity have surprised on the downside, meaning there is downside risk to our forecast."

Meanwhile, CIBC seemed to have a differing interpretation, stating, “It is slightly more hawkish than market discussions recently.  Overall, investors are reacting to the ever-so-slightly hawkish tilt of several members, bidding up the greenback and pushing yields at the short-end a little bit higher."  This indicates that as long as the economy remains in line with expectations, more rate hikes should take place.  This uncertainty regarding the variety of opinions was reflected in the markets yesterday.

Overnight in Asia, 8 out of 12 stock markets closed higher, but Europe is lower with 9 out of 13 markets in the red. In the U.S. today, 221 corporate earnings are scheduled to be reported with the most prominent being Domino’s Pizza, Barclays Bank, Wendy’s International, Toro Company, and Zillow.

The economic calendar is busy today with notable numbers coming in at 8:30, 9:45 and 10:00.  Natwest gives an estimate of a 2% rise for the Durable Goods Orders number at 8:30, referring to “a sharp increase in bookings by Boeing accounts for the bulk of our expected increase."  BMO expects a 1% increase in the number, stating, “There is little doubt that capex has downshifted in the face of trade and policy uncertainty. After growing at a 16.1% annualized rate in the four months to July due to tax reforms, the next four months saw core capital goods orders contract 2.6% annualized. Business investment is still expanding, though at a more moderate pace than earlier last year.”  We expect little change in most of the other categories.
 

Today’s Economic Calendar

  • Raphael Bostic Speaks 7:50 AM ET
  • Durable Goods Orders 8:30 AM ET
  • Jobless Claims 8:30 AM ET
  • Philadelphia Fed Business Outlook Survey 8:30 AM ET
  • PMI Composite FLASH 9:45 AM ET
  • Existing Home Sales 10:00 AM ET
  • Leading Indicators 10:00 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • EIA Petroleum Status Report 11:00 AM ET
  • 3-Month Bill Announcement 11:00 AM ET
  • 6-Month Bill Announcement 11:00 AM ET
  • 52-Week Bill Announcement 11:00 AM ET
  • 2-Yr Note Announcement 11:00 AM ET
  • 5-Yr Note Announcement 11:00 AM ET
  • 7-Yr Note Announcement 11:00 AM ET
  • 4-Week Bill Auction 11:30 AM ET
  • 8-Week Bill Auction 11:30 AM ET
  • 30-Yr TIPS Auction 1:00 PM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

 

Friday’s Economic Calendar:

  • 2-Yr FRN Note Settlement
  • John Williams Speaks 10:15 AM ET
  • Baker-Hughes Rig Count 1:00 PM ET
  • James Bullard Speaks 1:30 PM ET
  • Richard Clarida Speaks 1:30 PM ET
  • Patrick Harker Speaks 1:30 PM ET
  • John Williams Speaks 5:30 PM ET

 

Monday’s Economic Calendar:

  • Chicago Fed National Activity Index 8:30 AM ET
  • Wholesale Trade 10:00 AM ET
  • Dallas Fed Mfg Survey 10:30 AM ET
  • 3-Month Bill Auction 11:30 AM ET
  • 6-Month Bill Auction 11:30 AM ET
  • 2-Yr Note Auction 1:00 PM ET
  • 5-Yr Note Auction 1:00 PM ET

 

Tuesday’s Economic Calendar:

  • 8-Week Bill Settlement
  • Housing Starts 8:30 AM ET
  • Redbook 8:55 AM ET
  • S&P Corelogic Case-Shiller HPI 9:00 AM ET
  • FHFA House Price Index 9:00 AM ET
  • Consumer Confidence 10:00 AM ET
  • Jerome Powell Speaks 10:00 AM ET
  • Richmond Fed Manufacturing Index 10:00 AM ET
  • 4-Week Bill Announcement 11:00 AM ET
  • 8-Week Bill Announcement 11:00 AM ET
  • 52-Week Bill Auction 11:30 AM ET
  • 7-Yr Note Auction 1:00 PM ET

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