The key economic releases this week are CPI, retail sales, and industrial production on Wednesday. In addition, there are several scheduled speaking engagements from Fed officials this week, including Chair Yellen’s semi-annual Monetary Policy Report to Congress on Tuesday and Wednesday (Humphrey-Hawkins).
As discussed yesterday, the biggest event this week takes place on Tuesday when Fed-Chair Yellen is due to deliver her semi-annual congressional testimony before the Senate. She will then speak before the House Financial Services Committee on Wednesday. Even though we're unlikely to hear much new from Yellen, many banks believe she will use it as an opportunity to emphasize that the economy is reaching Congress' legislated mandates of full employment and price stability. Some banks, most notably BofA, expect her to boost March rate hike odds closer to 50% to make the meeting "live." Yellen will also likely address Fed balance sheet strategy in broad terms as it does not appear that the FOMC has formed a consensus around the details.
Wednesday's CPI report will also be closely watched for hints on ongoing inflation trends and may spark further gains in the dollar.
It’s a very quiet start to the week today with nothing of particular note due out aside from CPI revisions in the US.
On Tuesday we kick off in China with the January CPI and PPI prints before we then get industrial production data in Japan. During the European session we’ll get Q4 GDP data in Germany as well as the final CPI revisions for January and the February ZEW report. In the UK the January CPI/PPI/RPI data is out, while the other data due out is Euro area Q4 GDP and industrial production. Over in the US we’ll get the NFIB small business optimism survey as well as January PPI.
It looks set to be a busy day on Wednesday too. In Europe we’ll get the December and January labour market data in the UK, as well as the December trade balance for the Euro area. Over in the US the highlights are the January CPI report and January retail sales data. Empire manufacturing, business inventories, industrial and manufacturing production, and the NAHB housing market index reading will also be released.
Things quieten down again on Thursday with just unemployment data in France and housing starts, building permits, Philly Fed business outlook and initial jobless claims in the US.
We end the week in Europe on Friday with retail sales data in the UK. In the US the only data due out is the Conference Board’s leading index for January.
A look at just US events in the coming week, courtesy of BofA;
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Away from economic developments, the Fed’s Lacker, Lockhart and Kaplan also speak on
Tuesday, while Rosengren and Harker speak on Wednesday. The ECB’s Coeure
speaks on Thursday, which is also the same day the ECB minutes will be
released.
Earnings wise we’ve got 56 S&P 500 companies reporting accounting for 8% of the index market cap. In Europe we’re due to hear from 56 Stoxx 600 companies accounting for 10% of the market cap. Away from all that President Trump is also due to meet with Canadian PM Trudeau today and Israeli PM Netanyahu on Wednesday.
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Finally, courtesy of Goldman here is a breakdown of all US events together with consensus estimates:
Monday, February 13
There are no major economic data released today.
Tuesday, February 14
- 06:00 AM NFIB small business optimism index, January (consensus 104.9, last 105.8)
- 08:30 AM PPI final demand, January (GS +0.3%, consensus +0.3%, last +0.2%); PPI ex-food and energy, January (GS +0.2%, consensus +0.2%, last +0.1%); PPI ex-food, energy, and trade, January (GS +0.2%, consensus +0.1%, last +0.1%): We expect headline PPI to advance 0.3% (mom) in the January report following a 0.2% gain in the month prior, primarily driven by higher food and energy price increases. PPI ex-food, energy, and trade is likely to rise 0.2%, boosted by a recent rise in upstream import prices (ex-fuels).
- 08:50 AM Richmond Fed President Lacker (FOMC non-voter) speaks: Richmond Federal Reserve President Jeffrey Lacker will a give speech at the 2017 Economic Forecast conference organized by the University of Delaware. Audience and media Q&A is expected.
- 10:00 AM Fed Chair Yellen appears before the Senate Banking Committee: Federal Reserve Chair Janet Yellen will appear before the Senate Banking Committee to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers.
- 01:00 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Federal Reserve President Robert Kaplan will participate in a panel discussion at the Greater Houston Port Bureau Luncheon in Houston, Texas. Audience and media Q&A is expected.
- 01:15 PM Atlanta Fed President Lockhart (FOMC non-voter) speaks: Atlanta Federal Reserve President Dennis Lockhart will give a speech on the economic crisis, recession, and recovery to the Huntsville Rotary Club in Alabama. Audience and media Q&A is expected.
Wednesday, February 15
- 08:30 AM CPI (mom), January (GS +0.30%, consensus +0.3%, last +0.3%); Core CPI (mom), January (GS +0.24%, consensus +0.2%, last +0.2%); CPI (yoy), January (GS +2.4%, consensus +2.4%, last +2.1%); Core CPI (yoy), January (GS +2.2%, consensus +2.1%, last +2.2%): We forecast a 0.24% rise in January core CPI following December’s 0.23% increase, which would be enough for the year-over-year rate to remain stable at +2.2%. Our forecast embeds acceleration in consumer prices for recreation, household furnishings, and other services, as well as a partial-month impact from the January 22nd postage price hike (+2? for first class mail). We also expect a rebound in apparel prices following two consecutive declines. On the negative side, industry data suggest a slowdown in used car inflation, and we also expect below-trend growth in the education category. Owners’ equivalent rent inflation slowed 4bp last month to 0.28%, converging towards a pace more consistent with industry sources (which have shown deceleration in rent growth throughout 2H16). We expect food and energy prices to boost headline CPI and forecast a 0.30% month-to-month rise (+2.4% yoy). Finally, we note that the CPI’s annual seasonal adjustment revisions will be released on Monday, and any material changes to the seasonal adjustment factors may have implications for the pace of January inflation.
- 08:30 AM Retail sales, January (GS +0.3%, consensus +0.1%, last +0.6%); Retail sales ex-auto, January (GS +0.8%, consensus +0.4%, last +0.2%); Retail sales ex-auto & gas, January (GS +0.5%, consensus +0.3%, last flat); Core retail sales, January (GS +0.5%, consensus +0.3%, last +0.2%): We expect that retail sales grew at an above-trend pace in January following softer results during the holiday season – with the key retail control gauge accelerating to +0.5% (mom) from +0.2% in December. Our forecast reflects generally stable chain-store-sales data and scope for a rebound from December snowstorms, which may have affected some sales activity in the Midwest and West. On the negative side, industry sources suggest some sequential deceleration in prescription drug spending that may weigh on sales in the pharmacy category, where sales rebounded in November and December after flat-lining since August. Early-month storms in the Southeast present an additional source of downside risk, however we expect the impact will be minor. We do not expect an impact from widespread tax refund delays until the February report, as less than 5 percent of tax refunds are typically distributed in January, and 2017 daily refunds in that month were tracking at a similar pace to last year. We forecast gains of +0.3% (mom) for headline retail sales and +0.8% for the ex-auto component, driven by a further rise in gasoline prices but a 5% drop in auto sales (mom sa). We estimate the ex-auto ex-gas category rose +0.5%.
- 08:30 AM Empire manufacturing survey, February (consensus +7.0, last +6.5)
- 09:15 AM Industrial production, January (GS -0.2%, consensus flat, last +0.8%); Manufacturing production, January (GS +0.2%, consensus +0.2%, last +0.2%); Capacity utilization, January (GS +75.4%, consensus +75.5%, last +75.5%); We expect industrial production to decline by 0.2% in January, primarily driven by weaker motor vehicle production. In the December report, industrial production rose 0.8%, largely due to a weather-related rebound in utilities (+6.6%) that is likely to retrace a bit in the January report, reflecting warmer-than-usual January temperatures.
- 10:00 AM Fed Chair Yellen appears before the House Financial Services Committee: Federal Reserve Chair Janet Yellen will appear before the House Financial Services Committee in the second day of testimony to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers.
- 10:00 AM Business inventories, December (consensus +0.4%, last +0.7%): Consensus expects a 0.4% increase in inventory levels in December.
- 10:00 AM Atlanta Fed business inflation expectations, February (last +2.0%)
- 10:00 AM NAHB housing market index, February (consensus 67, last 67): Consensus expects the NAHB homebuilders’ index—which we have found to be a decent leading indicator of housing starts—to remain flat in February, following last month’s 2pt drop from December’s post-crisis highs.
- 12:00 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give the keynote address at the New York Association’s economic luncheon at the Harvard Club in New York City, NY.
- 12:45 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Federal Reserve President Patrick Harker will give a speech on the economic outlook at La Salle University’s 16th Annual Economic Outlook event in Pennsylvania. Audience and media Q&A is expected.
- 04:00 PM Total Net TIC Flows (last +$23.7bn)
Thursday, February 16
- 08:30 AM Housing starts, January (GS flat, consensus flat, last +11.3%); Building permits, January (GS +0.5%, consensus +0.2%, last +1.3%): January weather was relatively warm with few major snowstorms outside of the South region; however, it was also considerably wetter than normal. Accordingly, we expect housing starts to remain flat, following an 11% multifamily-led rise in December. We do expect a weather-related rebound in the Midwest region, and we believe favorable single-family fundamentals should mitigate the potential negative impact of higher interest rates. We also forecast a modest rise in building permits (+0.5%).
- 08:30 AM Initial jobless claims, week ended February 11 (GS 245k, consensus 244k, last 234k); Continuing jobless claims, week ended February 4 (consensus 2,060k, last 2,078k): We expect initial jobless claims to rise to 245k following last week’s 12k decline. While we believe much of the recent decline in jobless claims reflects seasonality-related volatility around the start of the year, the sustained improvement into late January and early February provides additional evidence that some of the drop is explained by underlying improvement in the pace of layoffs. We also note the year-to-date improvement in several energy-producing states, including Texas, Oklahoma, and New Mexico. Accordingly, we expect the pace of layoffs to remain low.
- 08:30 AM Philadelphia Fed manufacturing index, February (GS +20.0, consensus +18.0, last +23.6): We expect the Philadelphia Fed manufacturing index to retrench modestly to +20.0 in February, after unexpectedly jumping to a two-year high of 23.6 in the January report.
Friday, February 17
- 08:30 AM Leading economic index, January (consensus +0.5%, last +0.5%)
Source: BofA, DB, Goldman