Macro events & news for January 15, 2016

15 January, 2016

Macro events & news for January 15, 2016

FX News Today

Bullard: four rate hikes may still be about right after the strong US jobs number, though inflation remains uncertain. He said that neither the markets nor the Fed are thinking about a January hike, while more information is needed before making a call on March. He would be more inclined to put weight on inflation if expectations continue to decline, though he still thinks the economy is set to grow 2.5-3.0% this year. Bullard doesn’t think the Fed needs to “re-litigate” China concerns, since the country should still grow around 6%. He does see some pick-up in wages beyond inflation and productivity as an indication that the labor market is tight. He doesn’t believe that oil prices need to stabilize before a second Fed hike, though still-weak oil would weigh on the committee’s deliberations. This has a more hawkish overtone relative to his earlier dovish remarks on oil and inflation risks.

The BoE did the expected and kept monetary policy on hold at the January meeting. The voting pattern, which saw a broad majority of 8 in favour of keeping rates steady, with one dissenter, was also as expected. The statement and especially the minutes show, however, that uncertainty is rising. Growth projections as well as near term inflation projections seem to have been revised down already and the doubts concerning the medium to long term inflation forecasts seem to be on the rise as well. The February Inflation Report is likely to bring more clarity.

Yesterday’s US reports revealed big December trade price drops with yet another round of surprisingly big export price declines, and a 7k (seasonally adjusted) initial claims pop that masked a hefty 99k (not seasonally adjusted) increase. The renewed trade price plunge predictably reflects historic declines in energy prices, sharp gains in the value of the dollar, a global growth slowdown, an inventory overhang that is depressing prices, and a shifting supply-demand dynamic in the global petroleum industry that has wacked the factory sector. The initial claims rise likely reflects the ongoing difficulties of seasonal adjustment, though claims have clearly trended higher since early December to remove some of the upside risk that claims have routinely provided for the job growth outlook. We peg January payroll growth at 200k.

Main Macro Events Today

US Retail Sales: December retail sales will be released today and should show a 0.1% (median 0.1%) headline increase with the ex-autos component up 0.3% (median 0.3%). This follows November figures of 0.2% for the headline and 0.4% for ex-autos. The report faces divergent forces from firm construction data and chain store sales but the slowdown in auto sales and continued declines in gasoline prices will likely weigh.
US Michigan Consumer Sentiment: The first release on January Michigan Sentiment is expected to show an increase in the headline to 92.8 (median 93.0) from 92.6 in December’s final release. The already released IBD/TIPP poll for January improved slightly with an uptick to 7.3 from 47.2 in December. Gasoline prices continued to decline in December and the first half of this month which could help lift the headline.

US Industrial Production: December industrial production is out Friday and should reveal a 0.2% (median -0.3%) decline for the month. This would be the fourth month of consecutive declines, following drops of 0.6% in November, 0.4% in October and 0.1% in September. The December employment report revealed another month of weak data in the mining sector which will likely continue to weigh as oil prices continue to decline. We expect the capacity utilization rate to fall to 76.7% from 77.0% in November.


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FOMC said inflation will rise to 2% over the medium term

Asian stock markets mostly headed south ( Nikkei closed own -1.22% at 18, 914) ongoing concerns about am emerging global trade war, and as the dollar weakened after the Fed failed to signal a rate hike as early as March, which some expected after yesterday’s data round...

Asian markets were mixed overnight

US data reports: revealed modest shortfalls across the Q4 ECI data and the January figures for consumer confidence and Chicago PMI, though the shortfalls did nothing to change the outlook for GDP growth of 2.0% in Q1 after a 1.9% Q4 rise. A 0.5% Q4 U.S...

The selloff in equities continued in Asia overnight

The U.S. income report revealed a 0.3% December income rise after a small November boost that tracked assumptions, but a firm 0.5% consumption increase with a solid 0.3% real rise that modestly beat estimates...


Politics will remain omnipresent near term

This week’s heavy data slate is loaded with key releases, headlined by Friday’s January nonfarm payroll report. Jobs are forecast rising 190k after the disappointing 156k December increase...

Main Macro Events This Week

President Trump has his feet under the desk in the Oval office and the tone of his inaugural speech and actions over the weekend reiterated his campaign themes to Make America Great Again...

U.S. reports revealed a hefty 0.8% December industrial production

Asian stock markets traded mixed, with Japan and ASX moving higher, as Fed’s Yellen said she expects to hike rates few times a year through 2019 to 3% neutral rate...


Stock markets headed south in Asia overnight

Trump conducted a test of the intelligence community by having a meeting with those agencies without letting any of his staff know and news of that meeting was subsequently leaked, he said...

The year is only a week old

Though the December U.S. jobs report was largely plain vanilla, it was good enough to support rising animal spirits. The surprise headliner of the report, however, was the 0.4% surge in earnings, which caught the markets attention...

US stocks had a quiet day

USD fell back again overnight. Canada, Australia, New Zealand and Hong Kong are all back from the extended Christmas holiday, but trading volumes are likely to remain thin for the rest of the week...

  


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