Mostly US-focused data releases and the FOMC meeting this week.
The US FOMC two-day meeting will be held this week with the policy decision announced on Wed 27 Jan. The expectation is for rates and other policy settings to remain unchanged. The press conference is likely to shed further light on recent comments regarding the tapering of asset purchases and inflation targets.
The main US data releases this week will be the University of Michigan consumer sentiment for the second half of Jan. Talk of a further stimulus package (but running into roadblocks?) and the ramping up of vaccinations are likely to result in some improvement in sentiment.
US Q4 GDP will be released this week.
The PCE price index for Dec (as well as income and expenditure) will also be released this week. This is the Fed preferred measure of consumer prices. Anecdotes from various PMI’s reflect some price growth pressure for inputs but not all firms or sectors have passed these price increases on. Services price growth is likely to provide an offsetting effect.
We continue to follow the initial jobless claims as one of the higher frequency indicators of employment improvement – last week, initial claims for Federal programs were notably higher as programs were extended. Total initial claims remained elevated at +1.38m last week.
In Australia, the Q4 CPI will be released. This will be an important input into the RBA meeting on rates next week.
The US Fed purchases of Treasuries will be much lower this week, but MBS purchases will be significantly higher. The Fed plans to purchase $10.7bn in US Treasury securities this week (last week $16.6bn). The Fed will continue to purchase MBS at a faster rate, this week buying $36.02bn in MBS ($23.9bn last week). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be slightly heavier this week. The US Treasury will settle approx. $334bn in ST Bills and 10yr TIPS, raising approx. $5.8bn in new money.
This week, approx. $25bn in Bills will mature on the Fed balance sheet and will be rolled over.
This week, the US Treasury will also auction approx. $235bn in Notes, FRN’s, and Bonds, raising approx. $106bn in new money and will settle next week.
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.
