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 16th 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.
by Kim | Feb 8, 2021
A much quieter week on the data front.
The main US data releases this week will be the University of Michigan consumer sentiment data for early Feb and CPI for Jan. We continue to follow the initial jobless claims as one of the higher frequency indicators of employment improvement. Last week, initial claims for State and Federal programs were again somewhat lower at +1.16m claims by people (the prior week was 1.24m new claims). Total ongoing claims have also started to trend lower. Ongoing claims totaled 17.8m people (wk ending 16 Jan).
US Fed Chair Powell will give a speech this Wed on the “State of the US Labor Market” at the Economic Club of NY.
Germany industrial production for Dec will be released this week and will be an important barometer, as Germany has been the key market lifting broader Eurozone manufacturing activity. Rising infections and tightening restrictions have been impacting the German economy. Last week, German retail sales and new factory orders disappointed in Dec.
In Australia, business and consumer sentiment surveys will be released this week for Jan and early Feb. These are the high-frequency indicators of activity and sentiment. While the pandemic remains under control and activity continues to rebound, pockets of weakness remain. It will be important to see how sentiment is trending among states and key industries.
The calendar of US Fed purchases of Treasuries and MBS is incomplete for this week, and the new schedule will be released on 11 Feb. For the week up to, and including the 11 Feb, the Fed plans to purchase $16.63bn in US Treasury securities (last week $23.6bn). The Fed will continue to purchase MBS at an elevated pace, this week buying $27.2bn in MBS ($32.4bn 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. The US Treasury will settle approx. $285bn in ST Bills this week, with no change in new money.
This week, approx. $18bn in Bills will mature on the Fed balance sheet and will be rolled over.
This week, the US Treasury will also auction $126bn in Notes and Bonds – which will settle next week.
The US Treasury released the Q1 refunding documents last week. The estimated net cash to be raised this quarter was revised to $274bn (down from the original $1.127tr estimate). The US Treasury cash balance is expected to be $800bn at the end of Q1 (currently approx. $1.6tr). Changes to the issuance of CMB’s will commence after 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.
by Kim | Feb 1, 2021
The focus this week will be on the momentum of private sector growth for Jan, including US non-farm payroll growth, global PMI’s, and several central bank monetary policy decisions.
This week the BoE and RBA will meet on monetary policy.
The final global PMI’s for Jan will be released – providing a firmer view of the growth momentum coming into the start of 2021.
The main US data releases this week will be non-farm payrolls and employment for Jan and the ISM reports for the manufacturing and services sectors. We continue to follow the initial jobless claims as one of the higher frequency indicators of employment improvement. Last week, initial claims were slightly lower but total initial claims remained elevated at +1.3m claims by people.
In Australia, housing lending and retail sales (both for Dec) will be in focus. The Dec lending data indicated that the value of housing lending commitments reached a new record high value and increased by +8.6% versus Nov.
The US Fed purchases of Treasuries will be higher this week. The Fed plans to purchase $23.6bn in US Treasury securities this week (last week $10.7bn). The Fed will continue to purchase MBS at an elevated pace, this week buying $32.4bn in MBS ($36bn 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. $520bn in ST Bills, Notes, FRN’s, and Bonds this week, raising approx. $106bn in new money.
This week, approx. $19bn 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.
by Kim | Jan 25, 2021
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.
by Kim | Jan 18, 2021
The main highlights for this week are the Inauguration of Joe Biden as the next US President, the prelim global PMI’s for Jan, and the ECB and BoJ interest rate decisions.
This week, Joe Biden will be inaugurated as the next US President. Four areas have been highlighted for “urgent action” by the new administration: Covid-19 vaccination roll-out, further economic stimulus ($1.5tr relief plus $15min wage with infrastructure spending to follow), racial equality, and climate change.
This week, the ECB and the BoJ will meet on interest rates. It will be a quiet week for the US Federal Reserve ahead of the FOMC meeting next week.
The prelim global PMI’s for January will be released this week. This should provide some insight into momentum across the major economies coming into 2021 – especially given the level of infections & subsequent restrictions in place across many of these economies.
In the US, the key data releases will be initial and continuing jobless claims. Last week there was a notable rise in initial claims – which could be a seasonal increase after the holiday period. Data for new building permits and housing starts in Dec will be released this week.
In Australia, the labour market and employment survey for Dec will be released. This is a key data point for the RBA and interest rate policy.
The US Fed purchases of Treasuries will be slightly lower this week given the short week. The Fed plans to purchase $16.6bn in US Treasury securities this week (last week $26.6bn – updated). The Fed will continue to purchase MBS at a faster rate, this week buying $23.9bn in MBS ($28.3bn last week – updated). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $285bn in ST Bills this week with no increase in new money for the week.
This week, approx. $21bn in Bills will mature on the Fed balance sheet and will be rolled over.
This week the 10yr TIPS auction will take place (raising approx. $15bn 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.
by Kim | Jan 11, 2021
The weekly macro review for w/c 4 January 2021 – It was a turbulent week with further social and political unrest in the US, some weak data points, and continued peaks in Covid-19 infections and deaths.
In the US, the Democrats won the two Senate runoff races in Georgia. The Democrats will now lead a 50-50 split Senate for the next two years, with Democrat Vice-President Harris to cast the deciding vote. This opens the way for the Democrat agenda. By the end of last week, it was rumoured that another round of relief spending would be considered in the vein of $US3-4tr – made up of another round of one-off payments and infrastructure spending. This would be in addition to the $900bn in relief aid already passed.
The US non-farm payrolls last week highlighted the adverse impact of this current, more severe wave of Covid-19 cases. New peaks in cases and deaths continue to be recorded in the US. In many cases, local restrictions resulted in a severe decline in services (leisure and hospitality) payroll jobs in Dec. This was partially offset by increases across some services jobs such as trade, transport, and retail, as well as increases in goods-producing jobs. The household employment survey was little changed in Dec. The increase in employment was small – but was at least made up of higher growth in full-time jobs (offset though by a severe decline in part-time employed persons).
The main themes from the ISM’s were ongoing and increasing business disruptions from the current wave of infections. Supplier lead times continue to lengthen, led by transport and human resource constraints. There was a notable increase in the proportion of firms reporting higher input prices this month – especially across some commodities. Underlying demand conditions were surprisingly resilient given the disruptions.
The global PMI reports for Dec were generally stronger across manufacturing while services remained weaker. Across several larger economies – Germany, UK, and Japan, new peaks in infections have led to a further tightening of restrictions. This will likely impact the results for the next month.
There are more data releases covered in the review document. Use the links on the contents page to navigate to different country sections. Download the review here;
The macro outlook for w/c 11 January 2021 – The highlights this week will be key data points, several Fed speeches, and the ongoing US political and social unrest.
After a tumultuous week for the US, the focus is likely to remain on US politics. One of the important points will be how quickly (and how much) the new administration will move on a further round of stimulus/relief spending.
News of the rollout of Covid-19 vaccines continues to be overshadowed by rising infections and the re-imposition of restrictions. Last week, several major economies announced new shutdowns or restrictions including the UK, and countries such as Japan and Germany are also looking at further restrictions to reduce the growth of infections.
In the US, the key data releases will be retail sales for Dec, consumer sentiment for early Jan and, CPI for Dec. There will also be several US Fed Governor speeches including Fed Chair Powell on Thursday.
The new schedule of Fed purchases of Treasuries and MBS will be released on Thur 14 Jan, so the total value for this week is incomplete. So far, the Fed plans to purchase $13.8bn in US Treasury securities this week (last week $26.4bn). The Fed will also continue to purchase MBS at a faster rate this week buying $21.9bn in MBS ($28.8bn last week). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be heavier this week. The US Treasury will settle approx. $405bn in ST Bills, Notes, and Bonds this week, raising approx. $63.6bn in new money for the week.
This week, approx. $19bn 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.
