The focus for the week ahead will be firmly on the US FOMC policy decision and a notable number of other central bank meetings.
The FOMC will meet this week and submit new economic projections (SEP). The policy decision is likely to include a timeline for tapering – to possibly commence later in Q4. But there is also a chance that the Fed doesn’t announce a taper timeline at this meeting (maintain optionality). Either way, the SEP will be important this month to understand how committee members judge the progress of the recovery, whether there is any consensus around growth slowing and the impact on the outlook. The FOMC will want to keep a taper decision independent from any link to a future rate increase to ensure that markets don’t interpret the taper as a part of a tightening path.
US Fed Chair Powell will speak on Friday at a virtual event – “Perspectives on the pandemic recovery”.
Other central bank meetings this week: the BoJ, the BoE, and the PBoC. There is a holiday in China on 20/21 Sep and the PBoC, or other Chinese policymakers may step in to support markets in the wake of slowing growth and regulatory crackdowns. The minutes of the latest RBA meeting will also be published this week.
There are a notable number of other central bank meetings this week (not listed in the calendar) that may pose some specific headline risk: Sweden, Indonesia, Brazil, SNB, Philippines, Norway, Turkey, and South Africa.
Other important points this week will be US housing market data for Aug. This includes existing home sales expecting 5.89m (5.99m SAAR basis in Jul), building permits expecting 1.61m (prior 1.63m), and housing starts expecting1.56m (prior 1.53m).
The prelim PMI’s will provide a view of private sector momentum coming into Sep across the major economies.
This week, the US Treasury will settle approx. $191bn in ST Bills and FRN’s this week, with a net paydown of -$90bn (new issuance < maturing securities).
The 10yr TIPS and 20yr Bond will be auctioned this week and will settle next week.
Approx. $11bn in ST Bills will mature on the Fed balance sheet this week and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf or scroll through the file below.
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
