The Economic Week Ahead

Main Macro Events This Week

The end of the year is fast approaching. But, there is still a lot to be done over the next thirty days, with several important events and data reports to be assessed and digested before the markets can turn out the lights on 2017. One of the most crucial developments will be whether a tax reform bill can be crafted. Meanwhile, this week brings Fed Chair nominee Powell’s confirmation hearing, JEC testimony from Yellen, and an OPEC meeting. Political uncertainty in Germany will be an undercurrent ahead of Brexit talks in early December, with the EU Leaders Summit in mid-December, as well as ECB and FOMC meetings. And, a variety of top tier data on growth, inflation, production, and trade will help fine tune outlooks into 2018.

United States: There’s plenty in the U.S. this week to pique interest heading into December and year end. The holiday shopping season kicked off in style on Black Friday with strong retail spending, both in brick and mortar shops and online, with estimates around $33 bln, according to Customer Growth Partners data, which would be a 4.9% y/y pick up. Along with the focus on holidays, attention will turn to Congress which returns from the Thanksgiving recess and will set to work on the tax bill. Additionally, Fed Chair Yellen’s give her final JEC testimony (Wednesday). The Senate Banking Committee also begins hearings on Fed chair nominee Powell (Tuesday). The Beige Book is on tap too. (Wednesday).

As for data, revised Q3 GDP (Wednesday) will be a focal point.  The November ISM (Friday) is estimated slipping to 58.3 from 58.7. November vehicle sales (Friday). October new home sales (Monday) are expected to drop 10% to a 600k pace unwinding some of the hurricane-distorted 18.9% jump in September to 667k. November consumer confidence (Tuesday) is seen edging up to 126.0 from 125.9. October personal income and consumption (Thursday) will help further fine tune GDP forecasts, and will also be important gauges ahead of the holiday shopping season. Other housing data is slated this week includes the September Case-Shiller home price index (Tuesday), the September FHFA home price index (Tuesday), and October pending home sales (Wednesday). Construction spending (Friday) likely rose 0.7% in October after a 0.3% September gain. Also on tap is the November Dallas Fed’s manufacturing index (Monday), which surged 6.3 points to 27.6 in October, as well as the Chicago PMI, which is projected falling to 61.0 in November from 66.2.

Canada: Employment, GDP and the BoC’s Financial System Review headline a busy week of data and events. GDP (Friday) is expected to reveal a slowdown to a 1.6% Q3 pace of real GDP growth (q/q, saar) from the 4.5% growth rate in Q2. A slowdown in growth after the robust first half has been well-flagged by the BoC. Employment (Friday) is seen rising 20.0k in November after the 35.3k increase in October. The current account deficit (Thursday) is anticipated to widen to -C$20.0 bln in Q3 from -C$16.3 bln in Q2, as the nominal trade deficit ballooned in Q3. The industrial product price index (Tuesday) is expected to rise 0.5% in October (m/m, nsa) after the 0.3% decline in September, as energy and commodity prices moved higher while the loonie lost value against the U.S. dollar. September average weekly earnings are due Thursday. The CFIB’s November Business Barometer sentiment measure of small and medium firms is due out Thursday. Meanwhile, the Bank of Canada releases the Financial System Review on Tuesday. Governor Poloz and Senior Deputy Governor Wilkins will take questions from the press.

Europe: November seems to be ending on an upbeat note with plenty of reason for cheer. Confidence indicators have surged higher; the recovery remains on track; the ECB is still in a generous mood and there are glimmers of hope on the political fronts as well. This month’s round of survey data concludes with the European Commission’s November ESI Economic Confidence Indicator (Wednesday), which after the very strong PMI readings, is expected to show a marked uptick, especially as preliminary consumer confidence numbers have already came in much higher than anticipated. The German labour market in particular is looking increasingly tight and a decline in the November sa jobless number is anticipated (Thursday) of -7K, which would leave the adjusted unemployment rate at a record low of 1.5%. Overall Eurozone numbers meanwhile are also improving and the unemployment rate (Thursday) is likely to dip to 8.8% from 8.9% in September. The HICP rates anticipated to rise around 0.2%, which would bring the German rate (Wednesday) to 1.7%, the Italian (Wednesday), French (Thursday), both to 1.3% y/y and the overall Eurozone rate (Thursday) to 1.6% y/y from 1.4%. Though still below the ECB’s upper limit for price stability, growth indicators looking stronger than anticipated, making the ECB’s decision to extend the balance sheet once again and to leave QE open-ended, seem questionable. Indeed, there are more and more signs that while the ECB is reluctant to commit to a firm end date, in the central scenario the next QE program that ends in September next year, will likely be the last. The calendar also has Eurozone M3 money supply growth, French consumption, German retail sales and another updated for French Q3 GDP.

UK:  There is a risk of Brexit-related disappointment into the EU leaders’ summit in mid-December. While an FT report early last week (citing sources) attested that the EU and UK have a breakthrough in the works with regard to agreeing on divorcing terms, doubts have persisted. The EU’s Juncker said Thursday “we’ll see” as to whether there has been sufficient progress to move forward at the December-4 meeting between May, himself and EU chief Brexit negotiation, Barnier. This week’s calendar brings October lending data from the BoE (Wednesday), the November Gfk consumer confidence survey (Thursday) and the manufacturing PMI survey (Friday). The lending data expected to show steady lending to consumers, both unsecured and lending secured on dwellings, while consumer confidence to nudge lower, and the November manufacturing PMI report, to stay unchanged from November and indicate ongoing expansion in the sector.

Japan: October retail sales (Wednesday) are penciled in with a 1.0% y/y contraction after posting a 1.9% growth rate for large retailers. Overall sales are seen slowing to 0.3% y/y from 2.3% overall. October industrial production (Thursday) should rise to 1.5% y/y versus the previous 1.1% decline. October housing starts and construction orders are also due Thursday. The balance of releases come on Friday, with CPI figures headlining.  The November manufacturing PMI, and November auto sales are also on Friday’s docket.

China: official November CFLP manufacturing PMI (Thursday) is expected to slip to 51.4 from 51.6, while the November Caixin/Markit manufacturing PMI (Friday) is penciled in at 50.7 from 51.0.

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Andria Pichidi

Market Analyst


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