Finance, US News, Wall Street

Key Events This Week: The Most Improtant FOMC Meeting In Powell's Career

Key Events This Week: The Most Improtant FOMC Meeting In Powell’s Career

One wouldn’t know it from the eerie calmness in capital markets, with the VIX now trading below 16 and at its covid-era lows, but this week features some of the world’s biggest central bank meetings, including what Paul Tudor Jones called “the most important FOMC meeting in Powell” career, an EU-U.S. summit, a series of speeches by policymakers and seveeral top tie economic releases.

As DB’s Jim Reid notes, the highlight of the week is undoubtedly the FOMC conclusion on Wednesday with tapering discussions, dot plots, latest economic projections and inflation the focus of attention.

Otherwise, geopolitics will be heavily in focus. After the G7 summit conclusion permeates into markets, a NATO summit is held today, an EU-US summit takes place tomorrow, before US President Biden meets Russian President Putin on Wednesday in Geneva. In addition, we’ll get an increasing amount of data from the US for May (including PPI and Retail Sales), along with a monetary policy decision from the Bank of Japan.

Starting with the Federal Reserve, their decision on Wednesday represents the next big event on the market calendar, and the first time that we’ll hear from Fed officials since we’ve had another higher-than-expected inflation reading, that saw CPI inflation reach 5.0% year-on-year in May. At the last meeting in April, Fed Chair Powell reiterated his view that the price pressures would be transitory and were associated with the reopening process, so it’ll be interesting to see if he modifies his language on this at all. Nevertheless, markets are buying the Fed’s message for now, with yields on 10yr Treasuries closing at a 3-month low on Thursday. But it’ll be fascinating to see the dot plot from the FOMC as well as their forecasts for inflation, since last time in March the median dot still had rates on hold at the end of 2023, in spite of the fact that inflation was modestly above target then, reflecting their new average inflation targeting approach.

With regards to the Fed the dot plots, DB’s economists don’t expect the 2023 median rate forecast to suggest lift-off yet but it could be a close call (other banks expect one rate hike to be indicated). Two members would need to join the seven currently expecting a hike by 2023 for the median dot to rise. The press conference will be all about “talking about talking about” for tapering and whether we are there yet. Again most economists expect no formal conditions to have been met to accelerate this but we may get some fresh markers as to their progress on this and what they are looking for.

The main US data of note this week comes tomorrow with PPI and retail sales. The main focus will be on the PPI components for read throughs as to how transitory the undoubtedly high inflation we have at the moment is. We also have US building starts and permits on Wednesday. Elsewhere, there’s also Chinese data for May on retail sales and industrial production on Wednesday, as well as UK data including May CPI (Weds), retail sales (Fri) along with April unemployment (Tues). The rest of the data is in the day-by-day guide at the end.

Elsewhere, one of the most interesting pandemic events of the week comes today with England likely to postpone by four weeks the planned full easing of restrictions from next Monday (June 21st) as the Delta variant has led to the country consistently reporting over 7,000 daily cases over the past week for the first time since the end of February. Bloomberg has reported that there may be some earlier relaxations though of restrictions on weddings and major sporting events to allow larger public gatherings to take place. On a positive note, Germany’s health minister Jens Spahn suggested that the country might end the mask mandate for outdoor activities as Covid-19 infections recede. He added that face masks will remain recommended “when in doubt,” such as when traveling or meeting indoors.

Here is a day-by-day calendar of key events, courtesy of DB:

Monday June 14

  • Data: Euro Area April industrial production
  • Central Banks: BoE Governor Bailey and ECB’s Schnabel speak
  • Politics: NATO summit takes place

Tuesday June 15

  • Data: Japan April Tertiary industry index, UK April unemployment, Euro Area April trade balance, US May retail sales, PPI, capacity utilisation, industrial production, June Empire State manufacturing survey, NAHB housing market index
  • Central Banks: BoE Governor Bailey and ECB’s Rehn, Panetta and Holzmann speak
  • Politics: EU-US summit takes place

Wednesday June 16

  • Data: Japan May trade balance, April core machine orders, China May retail sales, industrial production, UK May CPI, US May housing starts, building permits, import price index
  • Central Banks: Monetary policy decisions from the Federal Reserve and the Central Bank of Brazil
  • Politics: US President Biden meets Russian President Putin

Thursday June 17

  • Data: China May new home prices, EU May new car registrations, Euro Area final May CPI, US weekly initial jobless claims, may leading index, June Philadelphia Fed business outlook
  • Central Banks: Monetary policy decision from Bank Indonesia and the Central Bank of Turkey, ECB’s Villeroy and Visco speak

Friday June 18

  • Data: Japan May nationwide CPI, Germany May PPI, UK May retail sales
  • Central Banks: Monetary policy decision from the Bank of Japan

Finally, looking at economic data releases this week, Goldman notes that the main ones are the retail sales report on Tuesday and the Philadelphia Fed manufacturing index on Thursday. The June FOMC meeting is this week, with the release of the statement at 2:00 PM ET on Wednesday, followed by Chair Powell’s press conference at 2:30 PM. There are no other major speaking engagements from Fed officials this week, reflecting the FOMC blackout period.

Monday, June 14

  • There are no major economic data releases scheduled.

Tuesday, June 15

08:30 AM Retail sales, May (GS -1.1%, consensus -0.6%, last flat); Retail sales ex-auto, May (GS -0.1%, consensus +0.4%, last -0.8%); Retail sales ex-auto & gas, May (GS -0.2%, consensus flat, last -0.8%): Core retail sales, May (GS -1.1%, consensus -0.4%, last -1.5%): We estimate a 1.1% decline in both headline and core retail sales (ex-autos, gasoline, and building materials) in May (mom sa). High-frequency data suggest a further moderation of consumer goods spending following the stimulus-driven March spike, mirroring the sequential pullback in auto sales. Nonetheless, the data continue to indicate healthy spending levels. We believe the reopening of the economy shifted sequential spending towards restaurants from grocers, which would create a positive wedge between the ex-auto ex-gas reading and retail control. We estimate a 0.2% decline in the former measure and a 0.1% decline in the ex-autos component.

08:30 AM Empire State manufacturing survey, June (consensus +22.0, last +24.3)

08:30 AM PPI final demand, May (GS +0.6%, consensus +0.5%, last +0.6%); PPI ex-food and energy, May (GS +0.5%, consensus +0.5%, last +0.7%); PPI ex-food, energy, and trade, May (GS +0.5%, consensus +0.5%, last +0.7%): We estimate that headline PPI increased by 0.6% in May. We also expect a 0.5% increase in both core measures, reflecting a drag from expiring CARES Act hospital payments but a boost from continued supply chain bottlenecks and reopening pressures.

09:15 AM Industrial production, May (GS +0.8%, consensus +0.6%, last +0.5%); Manufacturing production, May (GS +0.8%, consensus +0.7%, last +0.4%); Capacity utilization, May (GS 75.3%, consensus 75.1%, last 74.6%): We estimate industrial production rose by 0.8% in May, reflecting strength in auto manufacturing. We estimate capacity utilization rose by 0.7pp to 75.3%.

10:00 AM NAHB housing market index, June (consensus 83, last 83)

10:00 AM Business inventories, April (consensus -0.1%, last +0.3%)

Wednesday, June 16

  • 08:30 AM Housing starts, May (GS +4.5%, consensus +4.5%, last -9.5%); Building permits, May (consensus -0.2%, last -1.3%); We estimate housing starts increased by 4.5% in May. Our forecast incorporates higher permits and mean reversion after a large decline in April.
  • 08:30 AM Import price index, May (consensus +0.8%, last +0.7%)
  • 02:00 PM FOMC statement, June 15-16 meeting: As discussed in our FOMC preview, we continue to expect the first hint about tapering in August or September, followed by a formal announcement in December and the start of tapering at the beginning of next year. Our best guess is that the dots will not show a hike in 2023, but it is a close call.

Thursday, June 17

  • 08:30 AM Philadelphia Fed manufacturing index, June (GS 30.0, consensus 31.0, last 31.5): We estimate that the Philadelphia Fed manufacturing index declined by 1.5pt to 30.0 in June, reflecting continued production constraints from labor shortages and supply chain bottlenecks – as reported in the latest Beige Book – and a potential headwind from seasonal adjustment issues.
  • 08:30 AM Initial jobless claims, week ended June 12 (GS 345k, consensus 360k, last 376k): Continuing jobless claims, week ended June 5 (consensus 3,421k, last 3,499k): We estimate initial jobless claims decreased to 345k in the week ended June 12.

Friday, June 18

  • There are no major economic data releases scheduled.

Source: DB, Goldman, BofA

 

Tyler Durden
Mon, 06/14/2021 – 09:11

Jump To The Original Source

Facebook Comments

Check Also

Israel Blamed For Fresh Airstrikes Deep Inside Iraq

Israel Blamed For Fresh Airstrikes Deep Inside Iraq ...

Archives