World Week Ahead: Tonnes of Fed speak ahead

Monday 25th September 2017

A slew of speeches by US Federal Reserve officials including chair Janet Yellen in the coming days will be closely monitored following last week’s more-hawkish-than-expected outlook from the central bank.

Last Wednesday the Federal Open Market Committee indicated it still plans to hike interest rates once more this year, predicting that the impact of recent devastating hurricanes will affect economic activity in the near term but “are unlikely to materially alter the course of the national economy over the medium term.”

It also flagged its unchanged intention for three rate hikes in 2018, and said it will start paring its balance sheet in October.

Fed chair Janet Yellen is set to give a speech on Tuesday in Cleveland, Ohio. Other Fed officials giving talks this week include William Dudley, Charles Evans and Neel Kashkari today, Loretta Mester and Raphael Bostic on Tuesday, James Bullard and Eric Rosengren on Wednesday, Esther George on Thursday, as well as Patrick Harker on Friday.

Also speaking in the days ahead are Lael Brainard and Stanley Fischer; it may be Fischer’s final public speech as he’s poised to retire next month.

“Coming so soon after the September FOMC meeting, these remarks are not likely to be substantially different,” according to a note by TD Securities. “However, given the market was hawkishly surprised by the FOMC, there remain risks that clarifying comments could shift market sentiment in either direction.”

On Friday, San Francisco Fed boss John Williams said he sees potential for a December rate hike and he pegged 2.5 percent as the “new normal” for the fed funds rate, or key rate.

US economic data slated for release in the coming days include several reports on the housing industry including the S&P Corelogic Case-Shiller home price index and new home sales on Tuesday and the pending home sales index on Wednesday.

Other reports include the Chicago Fed national activity index and Dallas Fed manufacturing survey, due today; consumer confidence, and Richmond Fed manufacturing index, due Tuesday; durable goods orders, due Wednesday; GDP, international trade in goods, weekly jobless claims, corporate profits, and Kansas City Fed manufacturing index, due Thursday; as well as personal income and outlays, Chicago PMI, consumer sentiment, due Friday.

Last Friday, US Treasuries and gold rose, while stocks closed flat.

For the week, the Standard & Poor’s 500 Index added 0.1 percent, while the Dow Jones Industrial Average rose 0.4 percent. However, the Nasdaq Composite Index retreated 0.3 percent.

Shares of Hewlett Packard Enterprise closed 3.4 percent higher on Friday. The company is planning to cut about 10 percent of its staff, or at least 5,000 workers, Bloomberg reported, part of a broader effort to pare expenses.

The reductions are expected to start before the end of the year, according to Bloomberg, citing people who asked not to be identified because the matter is private. The cuts at the company are likely to affect workers in the US and abroad, including managers, the people said.

In Europe, the Stoxx 600 Index ended Friday with an advance of 0.1 percent from the previous day’s close. It was the highest close in two months, according to Bloomberg.

European Central Bank President Mario Draghi is set to speak today as well as on Friday, though analysts aren’t expecting fresh clues about the central bank’s plans to taper its quantitative easing.

Also, investors will assess the impact of a German parliamentary election, held on Sunday.

“Chancellor [Angela] Merkel is likely to return to power even if her party, the CDU, falls some way short of garnering enough votes to govern without a coalition partner,” Capital Economics economist Oliver Jones said in a note.

(BusinessDesk)

Comments from our readers

No comments yet