The Macro Outlook for w/c 22 February 2021

by Kim | Feb 22, 2021

The focus this week will be on US data, Fed speeches, and the passage of the next US stimulus bill through the House of Representatives.

The main data releases in the US include personal income, expenditure, and prices for Jan, the final read on consumer sentiment for Feb, the second estimate of Q4 US GDP, and a further read on manufacturing conditions throughout the US. Tracking initial claims trends continue to be in focus – and new claims remain stubbornly high.

There will be several notable Fed speeches this week including US Fed Chair Powell providing semi-annual testimony to the House of Representatives and the Senate, Vice Chair Quarles, Vice Chair Clarida, and Governor Brainard on the Fed’s maximum employment mandate.

The latest proposed US stimulus and relief bill is expected to start its passage through the US House of Representatives. Some key measures include a $1400 one-off payment (for those on <$75k year) and the extension of targeted unemployment benefits through to August.

There will also be several important Aus data releases this week including the Q4 wage price index and Q4 private sector Capex results.

The US Fed plans to purchase $22.37bn in US Treasury securities (last week/short week $17.8bn). The Fed will also purchase $32.45bn in MBS ($24.1bn last week). The target for the monthly increase in Fed holdings of MBS is at least $40bn/mth.

US Treasury issuance will be lighter this week and the US Treasury has also ceased issuance of the 15, 17, and 22 wk CMBs – resulting in a larger paydown. The US Treasury will settle approx. $269bn in ST Bills, 30yr TIPS, and 2yr FRN’s this week. As a result, the paydown will be -$60.9bn. The US Treasury will also auction $210bn in Notes and Bonds this week which will settle next week.

This week, approx. $21.8bn in Bills will mature on the Fed balance sheet and will be rolled over.

More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;

Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net

The Macro Outlook for w/c 15 February 2021

by Kim | Feb 13, 2021

The focus this week will be on the pace of global growth momentum in Feb, Central Bank minutes, and the development of the next US stimulus package.

The prelim global PMI’s for Feb will be released across the larger economies this week. While infection rates have started to ease and vaccinations have commenced, many countries are still affected by restrictions. Consumer-facing service sectors remain the most affected while manufacturing has generally remained resilient.

It is a short week in the US, but it will be busy on the data front. Key data releases for the US include retail sales for Jan, FOMC minutes, and a range of housing data (starts, approvals, and existing home sales) for Jan. Industrial production data for Jan will be released and will provide some hard data to contrast with the manufacturing survey data.

Last week, US consumer sentiment data indicated a continued weakening of expectations and sentiment generally. This was despite the expectation for another round of stimulus payments – the details of which are currently under development.

More surprising was the finding that consumers, despite the expected passage of a massive stimulus bill, viewed prospects for the national economy less favorably in early February than last month. http://www.sca.isr.umich.edu/

The decline in sentiment was led by falls in the expectations index as well as sentiment among households with annual incomes below $75,000. This highlights the significant progress that still needs to be made in employment and income growth. The current initial claims data continued to edge lower last week. The direction is positive, but the level remains elevated. Total continuing claims (latest data is from the week ending 16^th Jan) were substantially higher at 20.3m people compared to 17.8m people in the prior week. This was led by a continued shift into Federal pandemic assistance programs.

Both Europe and Japan will report prelim Q4 GDP growth this week.

The ECB and RBA will release the minutes of recent interest rate decisions.

Finally, the Australian labour market and employment report for Jan will be released.

The US Fed plans to purchase $17.8bn in US Treasury securities (last week $29.5bn). The Fed will also purchase $24.1bn in MBS ($32.5bn last week). The target for the monthly increase in Fed holdings of MBS is at least $40bn/mth.

US Treasury issuance will be heavier this week. The US Treasury will settle approx. $411bn in ST Bills, Notes, and Bonds this week, raising $63bn in new money. The US Treasury will also auction $33bn in 30yr TIPS and 2yr FRN’s – which will settle next week. This week, approx. $65bn in Bills, Notes, and Bonds will mature on the Fed balance sheet and will be rolled over.

More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;

Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.