The key economic releases this week include consumer confidence on Tuesday, the durable goods report on Wednesday, and the advance release of 2nd quarter GDP on Friday. The July FOMC statement will be released on Wednesday at 2PM. There are several scheduled speeches from Fed officials this week.
The week starts off on a quiet tone, with the only data being the Dallas Fed’s manufacturing survey.
With no notable releases in Asia or Europe on Tuesday, it’s all eyes on the US where we’ll get the S&P/Case-Shiller house price index, flash July services and composite PMI’s, consumer confidence, new home sales and Richmond Fed manufacturing survey data.
We start in China on Wednesday morning with the June industrial profits data and MNI consumer sentiment print. In Europe we’ll get consumer confidence data out of Germany, France and Italy. In the UK we’ll then get the advance Q2 GDP reading (+0.5% qoq expected). M3 money supply data for the Euro area will also be released. In the US on Wednesday the early focus is on the durable and capital goods orders data for June, while pending home sales data is also due out. That of course comes before the FOMC decision later in the evening.
Turning to Thursday, Germany CPI and unemployment data, Euro area confidence indicators and UK house price data are the highlights. In the US we’ll get the advance goods trade balance reading for June, initial jobless claims and Kansas City Fed’s manufacturing survey.
We close the week on Friday with what is set to be a very busy day. Japan will set the early tempo with the outcome of the BoJ meeting along with CPI, retail sales, industrial production, housing starts and jobless rate data. In Europe we’ll get the advance Q2 GDP reading for the Euro area (+0.3% qoq expected) along with July CPI, UK money and credit aggregates and finally France CPI and Q2 GDP data. In the US the big highlight is the Q2 GDP print where expectations is for +2.6% qoq annualized. We’ll also get the Q2 employment cost index, core PCE, Chicago PMI and final revision to the University of Michigan consumer sentiment reading. The results of the aforementioned EU stress tests will also be released in the evening.
A detailed breakdown of key US events via GS:
Monday, July 25
- 10:30 AM Dallas Fed manufacturing index, July (consensus -10, last -18.3)
Tuesday, July 26
- 09:00 AM S&P/Case-Shiller home price index, May (GS -0.4%, consensus +0.2%, last +0.5%): The Case-Shiller home price index appears to have been influenced by seasonal adjustment challenges recently. We expect a -0.4% decline in house prices in the May report based on the pattern seen last year. Over the past year, the 20-city index has increased 5.4%.
- 9:45 AM Markit Flash US Services PMI, July preliminary (consensus 52.1, last 51.4)
- 10:00 AM Conference Board consumer confidence, July (GS 95.3, consensus 95.5, last 98.0): We expect consumer confidence to move down in July after the large +5.6 gain last month. While US equity markets have moved up substantially and sentiment remains near post-crisis highs, other measures of consumer sentiment have softened in July, including the Bloomberg Consumer Comfort Index and the University of Michigan’s preliminary estimate.
- 10:00 AM Richmond Fed manufacturing index, July (consensus -4, last -7): Consensus expects the Richmond Fed survey to move up to -4 from -7 in June.
- 10:00 AM New home sales, June (GS -1.0%, consensus +1.6%, last -6.0%): We expect new home sales to decline 1.0% this month, below consensus estimates for a moderate gain, partially due to lingering payback from an outsized 12.3% gain in April. New home sales are highly volatile on a month-to-month basis. Housing starts and building permits both saw moderate gains in June, and the Homebuilders’ survey remains little changed over the past year. New home sales rose 8.7% over the past year.
Wednesday, July 27
- 08:30 AM Durable goods orders, June (GS -3.6%, consensus -1.1%, last -2.3%): Durable goods orders ex-transportation, June (GS +0.6%, consensus +0.3%, last -0.3%); Core capital goods orders, June (GS +0.8%, consensus +0.2%, last -0.4%); Core capital goods shipments, June (GS +0.1%, consensus +0.4%, last -0.5%): Headline durable goods orders are likely to decline further (-3.6% from -2.3%) due to softness in aircraft orders. We expect a solid gain of +0.8% in core capital goods orders and a modest gain in shipments in June. Industrial data showed improvement on net in June, with the ISM manufacturing index’s new orders component strengthening notably.
- 10:00 AM Pending home sales, June (consensus +1.2%, last -3.7%): Consensus expects a moderate pickup in pending home sales in June, following a 3.7% decline in May. We have found pending home sales—based on contract signings rather than closings—to be a decent leading indicator of existing home sales with a one- to two-month lag.
- 2:00 PM FOMC statement, July 26-27 meeting: As noted in our FOMC preview, we do not expect the committee to raise rates at the July meeting. However, guidance from the meeting is likely to indicate that the outlook remains broadly unchanged and rate hikes later this year are on the table, with modest upgrades to the post-meeting statement. We continue to see a 25% chance of a rate hike in September and a 40% chance of an increase in December. We expect Kansas City Fed President George to dissent in favor of a rate hike.
Thursday, July 28
- 08:30 AM Advanced goods trade balance, June (GS -$61.6bn, consensus -$61.1bn, last -$60.6bn): We expect the goods trade deficit to widen further, after the trade deficit rose in May as real goods exports edged down.
- 08:30 AM New U.S. Census Bureau Report on Advance Economic Indicators: The Census Bureau will introduce a new monthly report that encapsulates data currently released as part of the advance goods trade balance report, alongside new advance estimates for retail and wholesale inventories. This report will be incorporated by the BEA in the advance estimates of Q2 GDP.
- 08:30 AM Initial jobless claims, week ended July 23 (GS 250k, consensus 264k, last 253k): Continuing jobless claims, week ended July 16 (consensus 2,120k, last 2,128k); We expect initial jobless claims to edge down to 250k from 253k last week, near post-crisis lows. We continue to read the trend in claims as consistent with low layoff activity nationally, but expect near-term volatility due to annual auto-sector shutdowns in July.
- 11:00 AM Kansas City Fed manufacturing index, July (consensus +4, last +2)
Friday, July 29
- 08:30 AM Employment cost index, Q2 (GS +0.6%, consensus +0.6%, last +0.6%): We expect the ECI to hold steady at 0.6% in Q2, or up 2.4% (from 1.9% in Q1) on a year-over-year basis due to base effects from an unusually weak Q2 2015 figure. Our preliminary Q2 wage tracker—a weighted average of the ECI, average hourly earnings, nonfarm compensation per hour, and the Atlanta Fed’s wage growth tracker—stands at 2.9%.
- 08:30 AM GDP (advance), Q2 (GS +2.7%, consensus +2.6%, last +1.1%); Personal consumption, Q2 (GS +4.1%, consensus +4.1%, last +1.5%): We expect that Q2 GDP rose at a pace of 2.7% (quarter-over-quarter annualized), which would put the average for the first half of the year at 1.9%. The upward revision to our tracking estimate—from 2.3% initially—primarily resulted from stronger consumer spending. According to our estimates, PCE is tracking +4.1% (qoq ar). Offsetting these gains, we expect modest drags from trade and inventory accumulation. The BEA will also release its annual revisions to GDP alongside the Q2 report. Although the revisions are likely to be relatively minor this year, we expect them to show modestly higher construction spending and lower business fixed investment. In addition, the annual revisions may partially address issues pertaining to seasonal bias in the GDP data, with the BEA starting to seasonally adjust certain series identified as exhibiting seasonality on a quarterly basis (in a prior publication, we incorrectly stated that the issue would not be addressed at all). However, the revisions will only apply to some source data on observations spanning 2013 through the first quarter or 2016. Remaining residual seasonality is not expected to be fully removed until mid-2018.
- 9:30 AM San Francisco Fed President Williams (FOMC voter) speaks: Federal Reserve Bank of San Francisco President John Williams will speak at an event titled “Policy Dialogue: What’s Left in the Fed’s Toolkit?” in Cambridge Massachusetts. Audience Q&A is expected.
- 09:45 AM Chicago PMI, July (GS 55.0, consensus 54.0, last 56.8): We expect the Chicago PMI to decrease to 55.0 from 56.8, though still well above the breakeven level.
- 10:00 AM University of Michigan consumer sentiment, July final (GS 90.1, consensus 90.0, last 89.5): We expect University of Michigan consumer sentiment to be revised higher to 90.1 in the June final reading.
- 01:00 PM Dallas Fed President Kaplan (FOMC voter) speaks: Federal Reserve Bank of Dallas President Robert Kaplan will participate in a moderated Q&A session at the Independent Bankers Association of New Mexico’s annual meeting in Albuquerque, New Mexico. Audience and media Q&A is expected. Recently, President Kaplan has advocated for a “slow, gradual, careful” approach to raising interest rates.
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Away from the data we’re due to hear from the Fed’s Williams and Kaplan on Friday, while corporate earnings will be the other big highlight this week. 197 S&P 500 companies are due to report (or 38% of the index market cap) with the notable names including Apple (Tuesday), Verizon (Tuesday), Facebook (Wednesday), Coca-Cola (Wednesday), Alphabet (Thursday), Exxon Mobil (Friday) and Chevron (Friday). We’ll also get reports from 203 Stoxx 600 companies (or 39% of market cap) including Shell, AB-Inbev, BP and Astra Zeneca, as well as a number of the banks.
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