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Trading  | March 26, 2018

It’s a busy, holiday-shortened week for US data and Fed speakers: we get consumer confidence, the Case-Shiller house price index, final print of GDP and U. Michigan sentiment, advance goods trade balance, pending home sales, personal income & spending, core PCE and Chicago PMI.

Consumer confidence on Tues is expected to stay at elevated levels, driven by higher take-home pays and a strong labor market. After five consecutive months of a widening in the goods trade deficit, totaling $11.6bn, on Wed the deficit is expected to narrow to $74.4bn in February from $75.3bn in January. Initial jobless claims are expected to come in at 230,000, holding steady from the prior week’s reading of 229,000. Core PCE inflation is likely to rise 0.2% (0.199% unrounded) in February, edging up yoy inflation to 1.6% (1.552% unrounded). Real consumption should be flat. Fed Presidents Dudley, Mester, Quarles, Bostic, and Harker all speak this week.

But the most notable event this week has nothing to do with macro, but instead with another record deluge of bond supply from the US Treasury, or as Bloomberg puts it, an “unprecedented wave of issuance” as the Treasury auctions off $294 billion of bills and notes this week, its largest slate of supply ever. The $30 billion two-year note sale is the biggest since 2014, and comes as the maturity posted just its fourth weekly gain in the last six months. The three- and six-month bill offerings remain at record sizes.

“These larger auctions are more difficult to digest,” said Thomas Simons, a money-market economist at Jefferies. “But the auctions do OK when they have a concession. It’s even more necessary than it was in the past.”

Elsewhere, the EU-Turkey summit is expected to takes place on Mon, with EU hope to release of a second tranche of the refugee deal and Turkey to press on customs union upgrade. Egypt begins a three-day presidential election on Mon. China’s four biggest banks to post annual earnings with potential highlight of bad loan and capital condition.

A full breakdown of key events day by day, courtesy of Deutsche Bank:

  • Monday: The main highlights to kick the week off will likely be comments from various central bankers including the ECB’s Weidmann in the morning and the Fed’s Dudley and Mester in the evening. The only notable data releases due on Monday are the final Q4 GDP revisions in France and Dallas Fed manufacturing activity print in the US for March. Away from this, UK and EU negotiators are due to meet to discuss post-Brexit Irish border issues.
  • Tuesday: Overnight, the Fed’s Quarles is due to speak at an event in Atlanta. There’s no notable data to highlight in Asia while in Europe the main focus will likely be the March confidence indicators for the Euro area. In the US we’ll also get the March consumer confidence print, as well the March Richmond Fed manufacturing PMI and January S&P/Case-Shiller house price index readings. The Fed’s Bostic will then speak at a conference in the late afternoon, while the BoE is due to publish the record of its Financial Policy Committee meeting.
  • Wednesday: Early in the morning on Wednesday we should hear from the new PBOC deputy governor Pan Gongsheng. Datawise all eyes will be on the US with the third and final revisions due to be made for Q4 GDP, while the February advance goods trade balance, wholesale inventories and pending home sales data are also due out. The Fed’s Bostic is due to again make comments in the late afternoon. In Europe consumer confidence prints in Germany and France, and March CBI retail sales data in the UK is due.
  • Thursday: A busy day for data highlighted by the February PCE data in the US, and personal income and spending reports. The latest weekly initial jobless claims reading, March Chicago PMI and final revisions to the March University of Michigan consumer sentiment reading is also due. In Europe the main highlight will likely be the flash March CPI report in Germany. Money and credit aggregates data in the UK along with the final Q4 GDP revision is also due. Away from the data, in the early evening the Fed’s Harker is due to speak.
  • Friday: With most major markets shut for the long weekend holiday it should be a quiet end to the week. Industrial production and housing starts data is due in Japan for February while in Europe we’ll get the flash March CPI reports in France and Italy. There is nothing due in the US.

Finally, here is Goldman with a focus on US events this week, together with consensus estimates.

The key economic releases next week are the third vintage of Q4 GDP on Wednesday and the personal income and spending report on Thursday. There are a few scheduled speaking engagements by Fed officials this week

Monday, March 26

  • 10:30 AM Dallas Fed manufacturing index, March (consensus +33.5, last +37.2)
  • 12:30 PM New York Fed President Dudley (FOMC voter) speaks: New York Federal Reserve President William Dudley will give a speech on regulatory reform at the US Chamber of Commerce in Washington. Audience Q&A is expected.
  • 04:30 PM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Federal Reserve President Loretta Mester will give a speech on monetary policy at Princeton University. Audience Q&A is expected.
  • 07:10 PM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Vice Chair for Supervision Randal Quarles will discuss “The Roles of Consumer Protection and Small Business Access to Credit in Financial Inclusion” at the HOPE Global Forums annual meeting in Atlanta. Questions from a moderator are expected.

Tuesday, March 27

  • 09:00 AM S&P/Case-Shiller 20-city home price index, January (GS +0.6%, consensus +0.6%, last +0.6%); We expect the S&P/Case-Shiller 20-city home price index to rise 0.6% in the January report in line with the December pace. The measure still appears to be influenced by seasonal adjustment challenges, and we place more weight on the year-over-year increase, which ticked down one tenth to 6.3% in December.
  • 10:00 AM Conference Board consumer confidence, March (GS 129.0, consensus 131.0, last 130.8); We expect consumer confidence declined 1.8 points to 129.0. The February level of consumer confidence was elevated—both on an absolute basis and relative to other sentiment measures. Additionally, the stock market pullback and the rise in policy uncertainty likely weighed on consumer confidence this month.
  • 10:00 AM Richmond Fed manufacturing index, March (consensus +22, last +28)
  • 11:00 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Federal Reserve President Raphael Bostic will participate in a conversation at the HOPE Global Forums annual meeting in Atlanta.

Wednesday, March 28

  • 08:30 AM GDP (third), Q4 (GS +2.5%, consensus +2.7%, last +2.5%); Personal consumption, Q4 (GS +3.8%, consensus +3.8%, last +3.8%): The BEA will publish the third vintage of Q4 GDP, which we expect to remain at +2.5%. However, we believe that the risks to this estimate are skewed to the upside, and we note the possibility of an upward revision to the inventory component.
  • 08:30 AM U.S. Census Bureau Report on Advance Economic Indicators; Advanced goods trade balance, February (GS -$75.5bn, consensus -$74.2bn, last -$75.3bn); Wholesale inventories, February preliminary (last +0.8%): The expect the goods trade deficit to rise in February (+$0.2bn to $75.5bn), adding to the sharp increases in recent months. Our forecast reflects a surge in inbound container traffic, likely related to this year’s later-than-usual Chinese New Year.
  • 10:00 AM Pending home sales, February (GS -1.5%, consensus +2.0%, last -4.7%): Regional housing data released so far suggested another step down in contract signings, and we estimate pending home sales fell 1.5% in February. If realized, this would suggest scope for existing homes sales to resume their declines in March following a February rebound (pending home sales are a useful leading indicator of existing home sales with a one- to two-month lag).
  • 11:30 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Federal Reserve President Raphael Bostic will participate in a discussion at an event hosted by the Atlanta Society of Finance and Investment Professionals in Atlanta. Audience Q&A is expected.

Thursday, March 29

  • 8:30 AM Personal income, February (GS +0.5%, consensus +0.4%, last +0.4%): Personal spending, February (GS +0.3%, consensus +0.2%, last +0.2%); PCE price index, February (GS +0.18%, consensus +0.2%, last +0.37%);  Core PCE price index, February (GS +0.22%, consensus +0.2%, last +0.27%); PCE price index (yoy), February (GS +1.73%, consensus +1.70%, last +1.65%); Core PCE price index (yoy), February (GS +1.58%, consensus +1.6%, last +1.52%): Based on details in the PPI and CPI reports, we forecast that the core PCE price index rose +0.22% month-over-month in February, or 1.6% from a year ago. Additionally, we expect that the headline PCE price index increased 0.18% in February, or 1.7% from a year earlier. We expect a 0.5% increase in February personal income and a 0.3% rise in personal spending.
  • 08:30 AM Initial jobless claims, week ended March 24 (GS 230k, consensus 230k, last 229k); Continuing jobless claims, week ended March 17 (consensus 1,865k, last 1,828k): We estimate initial jobless claims edged up 1k 230k in the week ended March 24. Jobless claims have remained low in recent weeks, and while claims in New York look somewhat elevated and could normalize, we nonetheless expect another low reading. Continuing claims—the number of persons receiving benefits through standard programs—fell to a new cycle low in the prior week.
  • 09:45 AM Chicago PMI, March (GS 62.5, consensus 62.0, last 61.9): We expect the Chicago PMI increased 0.6pt to 62.5 in March following a 3.8pt drop in February. The index is likely to remain at a level consistent with solid manufacturing growth, consistent with incoming reports from other regional manufacturing surveys.
  • 10:00 AM University of Michigan consumer sentiment, March final (GS 101.5, consensus 102.0, last 102.0): We expect the University of Michigan consumer sentiment index to decline 0.5pt to 101.5 in the March final estimate, reflecting the pullback in the stock market in the second half of the month. The University of Michigan’s survey of 5- to 10-year ahead inflation expectations was stable at 2.5% in the preliminary March report.
  • 01:00 PM Philadelphia Fed President Harker (FOMC non-voter) speaks; Philadelphia Federal Reserve President Patrick Harker will participate in a discussion on the economic outlook at an event hosted by the New York Association of Business Economics in New York. Audience Q&A is expected.

Friday, March 30

  • US equity and bond markets will be closed in observance of Good Friday. There are no major economic data releases scheduled.

Source: BofA, DB, Goldman

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