All eyes will be on the FOMC next week as the central bank's policy making arm decides whether or not to slice another $10 billion of its monthly asset purchases or leave it as is at $75 billion. Although the consensus favors an additional $10 billion cut, recent developments surrounding emerging markets and worries about growth prospects in China might encourage the Fed to hold off on more aggressive monetary policy.
Preceding the FOMC meeting is new home sales and durable goods orders, both key components of the economic landscape. According to a report from the National Bank of Canada (NBC), durable goods is expected to show a healthy gain thanks to production gains in Boeing ( BA ) as well as on indications from the ISM orders sub-index.
And while new home sales dipped 2.1% in November (the first decline in 4 months), the impact of higher lending rates might not be as pronounced as it was towards the end of 2013. However, the weather and holidays could impact sales in December, suggesting a slight reduction from the 464,000 seasonally adjusted pace in November. Other housing data for next week includes the Case-Shiller Home Price Index and pending home sales.
Also on tap for next week is the first revision to fourth quarter GDP. The National Bank of Canada is forecasting a slight moderation in Q4 GDP--to 3.7% from the preliminary pace of 4.1% -- but still expects to see an economy "firing on all cylinders" with consumption and investment spending showing a sizable rebound.
Unfortunately, healthy economic growth has yet to translate into upbeat consumer confidence. After the Reuters/Univ of Michigan survey fell to 80.4 from 82.5 in December, the Conference Board's survey is forecast to show a similar deterioration in consumer sentiment.
While consumer attitudes might not be as cheerful, their spending habits have not changed much. NBC predicts both income and spending to rise 0.2% in December.
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