Weekly Economic Overview (October 14 - 18, 2013)


US lawmakers continued their struggle to reach an agreement on raising the nation's debt limit and restoring government operations over the weekend. But, with the most controversial demands from Republicans off the table, both parties are now trying to craft a deal that would allow Washington to step back from the ledge.

The budget impasse has led to a partial US government shutdown for the past 2 weeks, with an estimated 800,000 federal employees furloughed. However, despite the noise and fury in Washington, markets seem to be less panicked as they've witnessed political theater on numerous occasions in the past and expect that an 11th hour compromise would be reached.

Following are Sentiment charts for S&P 500 (NYSE:SPY), DOW Jones, and NASDAQ (NASDAQ:QQQ).

Following is an economic overview for the week October 14 - 18, 2013.

(All times EST)

Tuesday, October 15

04:30 — Great Britain Consumer Price Index (CPI):

In August 2013, CPI fell to 2.7%, from 2.8% in July 2013. If inflation continues to decline in September, it may influence the decision of Bank of England regarding its monetary policy

Wednesday, October 16

04:30 — Great Britain Claimant Count Change:

The Claimant Count Change, which measures the change in the number of unemployed people in the UK, declined by 32,600 in August, compared to a decline of 36,300 in July, but exceeded analysts' expectations of a decline of 22,000. Unemployment rate also dipped to 7.7% in the three months ending in July 2013 from 7.8% previously. Current consensus expectations for September call in for decline in claimant count change by 24,300. The jobs data has taken on a new significance since the Bank of England, keen to encourage investment and spending, pledged in August 2013 to keep benchmark borrowing costs low as long as the unemployment rate remained above 7%.

05:00 — Euro Zone CPI:

CPI in the Euro zone held steady in August at 1.3%, which is well below ECB's target inflation of 2%. If inflation declines in September, it could raise the odds of ECB cutting its cash rate.

08:30 — Canada Manufacturing Sales:

Monthly report will present manufacturing sales in Canada for August 2013. In manufacturing sales July posted at gain of 1.7%, giving hope that Q3 started off strong after a weak end to Q2 mainly due he floods in Alberta and a construction strike in Quebec.

10:30 — Crude Oil Inventories:

EIA (Energy Information Administration) will publish its weekly report on US oil and petroleum inventories for the week ending on October 11, 2013. However, if the shutdown prolongs until then, the report might not get published.

Thursday, October 17

08:30 — US Unemployment Claims:

Weekly report will refer to changes in initial jobless claims for the week ending on October 11, 2013. Last week jobless claims increased sharply by 66K to reach 374K. This upcoming weekly update may affect the US dollar and consequently commodities and stocks markets.

10:00 — Philly Fed Manufacturing Index:

In September 2013, the index jumped to a reading of 22.3 from 9.3 in August, highest reading since March 2011. The indicators of future activity also came in significantly higher, suggesting improved optimism about growth over the next six months. If the index continues to increase in October, it may positively affect the US Dollar and commodities prices.

22:00 — China Q3 GDP:

In Q2 2013, GDP grew 7.5%, down from 7.7% growth in Q1 2013. However, recent data suggests improving conditions in the world's second largest economy, which has led to economists raising their growth target to 7.8% for Q3 2013.

22:00 — China Industrial Production:

China's factory production surged 10.4% (year-on-year) in August 2013, up 0.7% from a month earlier. August data showed a recovery trend, after the government used measures from tax cuts to extra spending on railways to defend 7.5% expansion goal for 2013. If industrial production continues to increase in September, it may suggest that economic growth projections are on track and that government policies are proving to be highly effective.

Friday, October 18

08:30 — Canada Core CPI:

Monthly report will present CPI and core CPI for September 2013. In August, CPI was flat on a monthly basis but core CPI increased by 0.2%. The inflation rate has stayed below the Bank of Canada's 2% target since May 2012. The bank is expected keep its benchmark interest rate on hold at 1% as long as inflation is muted. This upcoming report might affect the Canadian dollar, which tends to be strongly correlated with oil prices.

Commentary by:
Adil Yousuf

This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Economy , Stocks , US Markets

Referenced Stocks: QQQ , SPY

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