by Kim | Nov 29, 2021
Key themes for the week ahead – US non-farm payrolls, growth momentum, and central bank speeches
It will be another big week of economic data and central bank speeches. Other things to be aware of this week; the lead-up to the debt ceiling limit, finalizing the passage of the Democrats spending bill in the Senate, OPEC+ meeting, and reactions to the new Covid-19 variant.
US Non-Farm Payrolls
Non-farm payrolls are expected to increase by +550k for Nov (compared to +531k in Oct). Payrolls growth before Oct had been revised higher which added to the FOMC case to begin the taper. Last week, Fed Governor Bostic noted that a faster taper could be possible. A stronger result for Nov may put this more firmly on the table. The FOMC meets 14/15 Dec so will likely have time to weigh up risks from a new Covid variant.
Growth Momentum
The final Nov Markit PMI’s will be released this week. Last week, the prelim Markit PMIs for Nov showed continued moderate output growth across manufacturing and services. Momentum in the Eurozone, Japan, and Aus was better than expected. Services growth was slower in the US and the UK. Supply constraints continued to hinder output growth (e.g., Germany auto manufacture), higher input price growth weighed more broadly, and selling prices also increased broadly.
The US ISM reports will be released this week – commentary and growth momentum (esp. in services) will be in focus. The headline ISM manufacturing index is expected to reach 61 in Nov (up from 60.8 in Oct). The headline ISM services index is expected to ease to 65.5 in Nov (from 66.7 in Oct).
Central Bank Speeches
This week there will be several central bank speeches including FOMC Chair Powell (Senate testimony), BoJ Governor Kuroda, and BoE Governor Bailey. There will be other US Fed Governor speeches – including Williams, Clarida, Bowman, and Quarles.
The renomination of Chair Powell and the nomination of Governor Brainard to Vice-Chair was announced last week.
This week, the US Treasury will auction and settle approx. $520bn in ST Bills, Notes, Bonds, and TIPS, raising approx. $54bn in new money. Approx. $45bn in ST Bills, Notes, and Bonds 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 below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Nov 29, 2021
Last week saw a sharp decline in risk assets across the board after completing its latest impulsive 5 wave rally. Friday's sharp decline was preceded by a clear warning of an impulsive 5 waves down from the ES and NQ marginal new ATH's as tweeted (nice bearish setup). Markets rarely top on bad news (Omicron […]
by Kim | Nov 22, 2021
Key themes for the week ahead – central banks, global growth momentum, and US inflation.
It might be a shortened holiday week, but there will be much to digest.
Central Banks
The latest FOMC and ECB meeting minutes will be released. The next US Fed Chair is expected to be announced this week. The RBNZ meets this week and a 25bps increase in the cash rate is possible. There will also be several speeches including BoE Governor Bailey and ECB President Lagarde.
Global Growth Momentum
This week, the prelim PMI’s for Nov are expected to show continued modest acceleration in US manufacturing and services activity. Private sector growth across the UK and Europe is expected to have slowed. Covid disruptions within Europe remain an issue.
US industrial production last week improved across the three key industries, with a notable rebound in motor vehicle output. Initial US regional manufacturing data for Nov indicated that input and selling price growth remained widespread and growth in delivery lead-times remained elevated. Demand growth was mixed.
Inflation
This week, the US Fed preferred view of consumer prices will be released. The PCE price index is expected to increase by +4.6% in Oct (from 4.4% in Sep) and the core PCE price index is expected to accelerate from 3.6% in Sep to 4.1% in Oct.
Last week, consumer price inflation data from the UK and Canada showed a further acceleration. UK CPI was higher than expected at 4.2% (expecting 3.9%) and consumer prices in Canada increased by 4.7% (expecting 4.7%) versus +4.4% in Sep. Aus wages growth was a little higher than expected at +0.6% for the quarter (prior +0.4%). Japan consumer price growth remained weak with headline CPI -0.1% (expecting +0.5%) for the year to Oct.
The monthly US personal consumption expenditure and income data for Oct will also be released this week. Incomes are expected to increase by +0.2% (MoM) after declining by -1% in Sep. Personal expenditures are expected to increase by 1% (prior month +0.6%). The final University of Michigan consumer sentiment data for Nov is expected to show little improvement with headline sentiment at 67 (versus 66.8 prelim Nov).
This week, the US Treasury will auction and settle approx. $287bn in ST Bills and FRN’s, raising approx. $7bn in new money. The US Treasury will also auction the 2yr, 5yr, and 7yr Notes this week ($176bn) – to settle next week on 30 Nov.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Nov 22, 2021
Last week saw growing intermarket divergence as the Nasdaq and SPX pushed to new ATH's while the DJIA and Russell faded badly. Risk remains favoured while long rates are contained despite (and maybe because of) the US$ continuing its strong bullish break-out. Industrial commodities and commodity currencies are rolling over as the flattening yield curve […]
by Kim | Nov 15, 2021
Key themes for the week ahead – inflation
Inflation is the key theme for this week with several more CPI reports due for Oct.
There will also be numerous US Fed speeches this week, the first look at US manufacturing momentum going into Nov, and US housing data for Oct.
Inflation
Key central bank policymakers have acknowledged that inflation has been more persistent than expected. Central banks have forecast that Inflation will likely ease through H1 next year as supply chains recover, Covid pressures ease, and labour markets continue to recover. But ST rates still reflect the likelihood that CB’s will start to hike earlier than expected.
From last week, consumer price inflation came in higher than expected in the US and China for Oct. In the US, CPI growth was +6.2% (exp +5.8%) and there was a broad contribution to the acceleration. By the end of the week, ST US rates (1-5yr) reached new YTD highs as the curve flattened even further.
The inflation data out this week is important in the context of the other key CB’s and ST rate forecasts; UK CPI (exp +3.9%), Canada CPI (exp +4.6%), Eurozone CPI (exp +4.1% and +0.8% mth), Japan CPI (exp +0.2%) and the Aus Wage Price Index (exp +2.2% YoY and +0.5% Qtr). Japan is the obvious exception.
Growth Momentum
This week US industrial production data for Oct will be released (exp +0.7% v -1.3% Sep) – last month was lower due mostly to a further 7% decline in motor vehicle output. We will also get the first view of US manufacturing momentum going into Nov with several regional surveys to be released. This will provide further insight into the progress of supply chain issues, prices, and impact on output.
This week, the US Treasury will settle approx. $363bn in ST Bills, Notes, and Bonds, raising approx. $37bn in new money. This includes the addition of a $60bn 14-Day CMB this week.
The US Treasury will also auction 10yr TIPS and the 30yr Bond this week – to settle on 30 Nov.
A decision on the US Fed Chair position is imminent.
Next week is a short week due to the US Thanksgiving holiday.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
