While Wall Street is zeroing in on the FOMC meeting next Tuesday
and Wednesday, the economic calendar is flush with key data that
might come in too late to have much of an impact on the Federal
Reserve, but will keep investors guessing will they or won't
Data on all segments of the economy will be pouring in all week
including manufacturing, housing and inflation, although the
majority of it will be released before the conclusion of the Fed's
Federal Open Market Committee (FOMC) meeting on Wednesday.
We've come to all but ignore the inflation data given the lack
of any price pressure either from the consumer or producer side.
November CPI will show that the annual CPI is still a benign 1.3%
with the core-CPI a tame 1.7% for the year, comfortably below the
Fed's 2.0% target rate.
Housing has been less predictable as rising Treasury yields and
its subsequent impact on mortgage rates continues to hold the
housing market hostage. According to forecasts by the National Bank
of Canada, housing starts for November are expected to remain in
the 970,000 annual pace but with higher lending rates evidenced by
a drop in permits. And with pending home sales showing signs of
slowing down, existing home sales are expected to slow to a
5.03-5.05 million annual pace from 5.12 million the month
Finally, manufacturing has been the one constant that the
Federal Reserve can point to as reason to start cutting off
liquidity. Industrial production is expected to rebound in November
by 0.5%, more than offsetting the disappointing 0.1% contraction
the month prior. Capacity utilization is also expected to rebound
to 78.4% in November from 78.1% the month prior. For the third
quarter, non-farm productivity should improve dramatically by 2.8%
from a 1.9% gain, while labor costs remain extremely benign.
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