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Trading Radar: The Long-Awaited September FOMC Meeting Finally Arrives

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Economics, earnings reports, and market events for the week ahead.

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Next week the market-moving news will be dominated by the FOMC meeting on Wednesday, and remarks from the Federal Reserve about its forward plans for monetary policy.

The FOMC monetary policy statement, due out at 2 p.m. ET on Wednesday, will be followed by a press conference with Ben Bernanke 30 minutes later. It's unlikely that any announcement about a taper in the Fed's bond-buying program will move the market, as the market is expecting a slight taper. However, if the taper is extreme in either direction -- if purchases will not be reduced, or if the reduction is sizable -- the market will react. Interest rates will move if the Fed changes its unemployment or inflation thresholds for future policy action. The first rate hike is expected to occur in February 2015, and any change in that timing would result in a large decline or increase in US Treasuries. Also, the Fed may look to defend its inflation goal, an unprecedented step since the central bank has always been an inflation-fighting institution. Lastly, central growth forecasts should be taken down to reflect the slower pace of growth projected for this year.

Economic releases will also make the news. On Monday, we see the first glimpse of September manufacturing data from the NY Fed's Empire Manufacturing survey. Additionally, August industrial production and capacity utilization figures will be released. In the August ISM manufacturing survey, the diffusion index and new orders sub component rose to the highest level since April 2011 and represented the strongest continued acceleration since spring 2009. Economists are expecting a strong 0.5% monthly growth in industrial production.

Preliminary August housing data is due out on Wednesday in the form of housing starts and building permits. Economists are estimating a modest 2.1% growth in starts and a 0.4% decline in permits. The August retail sales report this past week showed a -0.9% decline in building materials, which typically indicates a decline in building permits. However, the July report was revised up to +0.4% from -1.8%, so the net change should be close to neutral. New home starts peaked in March and new home contracts peaked in July. The other piece of housing data out for the week is Thursday's existing home sales. Sales are expected to fall 2.6% to an annual rate of 5.25 million.

The last piece of economic data due out is August consumer price indices. The consumer price index is estimated to fall to an annual rate of 1.6% from 2.0% in the prior month. A decline is forecast in part because of falling gas prices; the core index is forecast to rise to an annual rate of 1.8% from 1.7%. National average gas prices fell by $0.035 during the month of August. Grain prices were also down heavily on a much better than expected crop report.

The Bank of India will release its monetary policy decision on Friday morning. This decision had been delayed by the new governor in order to give him time to work out the central bank's forward policy. Another central bank-related release is the Bank of England's minutes from the meeting earlier this month. New governor Mark Carney appears to have a divided Monetary Policy Council and these minutes should offer more information on the behind-the-scenes sentiment.

The unofficial start of earnings season begins next week with a report from economic bellwether Fedex (NYSE:FDX). Other reports for the week include Adobe (NASDAQ:ADBE), Oracle (NASDAQ:ORCL), and General Mills (NYSE:GIS).


Monday, September 16

US Economics (Time Zone: EDT)

08:30 Empire Manufacturing – consensus 9.00, prior 8.24
09:15 Industrial Production MoM – consensus 0.4%, prior 0.0%
09:15 Capacity Utilization – consensus 77.9%, prior 77.6%
11:00 Fed to purchase $750m-$1b bonds in 11 to 18-year range
11:30 Treasury selling $30b 3-month bills, $25b 6-month bills

Global Economics (Time Zone: GMT)

CNY Foreign Direct Investment
09:00 Eurozone CPI

Earnings

No major reports


Tuesday, September 17

US Economics (Time Zone: EDT)

08:30 Consumer Price Index YoY – consensus 1.6%, prior 2.0%
08:30 CPI Ex Food & Energy YoY – consensus 1.8%, prior 1.7%
09:00 Total Net TIC Flows
09:00 Net Long-term TIC Flows
10:00 NAHB Housing Market Index – consensus 59, prior 59
11:00 Fed to purchase $1.25b-$1.75b bonds in 23 to 30-year range
11:30 Treasury selling 4-week bills, $22b of 52-week bills

Global Economics (Time Zone: GMT)

08:30 GBP PPI
08:30 GBP CPI
09:00 EUR Eurozone ZEW Economic Sentiment

Earnings

After:
Adobe (NASDAQ:ADBE)


Wednesday, September 18

US Economics (Time Zone: EDT)

7:00 MBA Mortgage Applications
08:30 Housing Starts – consensus 921K, prior 896K
08:30 Building Permits – consensus 950K, prior expected to be revised up to 954K from 943K
2:00 FOMC Rate Decision
2:30 Bernanke press conference

Global Economics (Time Zone: GMT)

01:30 CNY China Property Prices
08:30 GBP BoE Minutes
09:00 CHF ZEW Survey Expectations
22:45 NZD GDP
23:50 JPY Trade Balance
5:30 Germany selling EU5b in 2-year notes

Earnings

Before:
FedEx (NYSE:FDX)

After:
Oracle
(NYSE:ORCL)
General Mills (NYSE:GIS)


Thursday, September 19

US Economics (Time Zone: EDT)

08:30 Initial Jobless Claims - consensus 330k, prior 292k
08:30 Continuing Claims – consensus 2913K, prior 2871K
08:30 Current Account Balance (2Q) – consensus -$97.6B, prior -$106.1B
10:00 Philadelphia Fed – consensus 10.0, prior 9.3
10:00 Existing Home Sales – consensus 5.25M, prior 5.39M
10:00 Existing Home Sales MoM – consensus -2.6%, prior 6.5%
10:00 Leading Index – consensus 0.6%, prior 0.6%
11:00 Fed to purchase $2.75b-$3.5b notes in 7 to 10-year range
1:00 Treasury selling $13b 10-year TIPS (1st reopening)

Global Economics (Time Zone: GMT)

JPY BoJ Governor Kuroda to give speech in Tokyo
05:00 JPY Leading Index (final estimate July)
06:00 CHF Trade Balance
07:30 CHF Swiss National Bank Rate Decision
08:30 GBP Retail Sales
9:30 Spain selling 3, 15-year bonds
9:50 France selling 2, 3, 5-year notes
10:30 UK selling GBP4.75b 5-year notes

Earnings

Before:
ConAgra (NYSE:CAG)
Rite Aid (NYSE:RAD)
Pier 1 Imports (NYSE:PIR)


Friday, September 20

US Economics (Time Zone: EDT)

No major reports scheduled
11:00 Fed purchasing $1.25b-$1.75b notes in 23 to 30-year range

Fedspeak

12:30pm George speaking on economy in NY
12:55pm Bullard speaking on economy and monetary policy in New York
1:45pm Kocherlakota speaks on economy in NY

Global Economics (Time Zone: GMT)

JPY Japanese Investors Buying of Foreign Stocks/Bonds
01:30 INR Bank of India Rate Decision
08:30 GBP Public Credit Growth
12:30 CAD CPI

Earnings

No major earnings reports


Twitter: @MichaelSedacca

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