The shenanigans in DC came to an end last week with the US economy avoiding default, yet again with an 11th hour deal. For the week, DOW Jones gained 1.07%, S&P 500 (NYSE:SPY) rallied 2.42%, and NASDAQ (NASDAQ:QQQ) jumped 3.23%.
The market's ascent was aided by expectations that the Federal Reserve will delay tapering its massive stimulus measures due to the economic sabotage caused by the government shutdown.
The political theater in Washington proved to be a blessing in disguise for precious metals as well. Gold settled more than 3% higher amid weakness in the greenback and belief that the Federal Reserve will likely prolong its bond buying. The current legislative gridlock in the US is also rumored to increase Gold buying by the Chinese central bank, which attempts to diversify its exposure and heavy reliance on US treasuries for its foreign exchange reserves.
A glut of economic data is expected this week along with earnings from more than one quarter of the S&P 500 companies. With the fiscal fiasco behind us, markets will now return focus to earnings and how much the government shutdown actually impacted the economy.
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 21 - October 25, 2013.
(All times EST)
Monday, October 21
10:00 — US Existing Home Sales:
Existing home sales fell 1.9% to an annual rate of 5.29 million units in September vs. expectations of a decline of 2.9% to a 5.3 million unit rate. The drop in home resales adds to other housing data that have suggested the high mortgage rates are starting to slow housing market recovery.
Tuesday, October 22
08:30 — Canada Retails Sales :
This report will present retail sales in Canada for August. In July, retail sales increased by 0.6%.
08:30 — Non-Farm Employment Change :
September payroll numbers, will be released after a two week delay caused by the government shutdown. If there was no government shutdown, this economic data could have been a key indicator in Federal Reserve deliberations on when to taper its bond purchases. But now, economists are concerned about the accuracy of the information given the government's partial closure.
Wednesday, October 23
04:30 — Monetary Policy Committee Asset Purchase Facility Votes:
In September, the MPC left the interest rates unchanged at 0.5% and the asset purchase program at Â£375 billion. Though no changes are expected, this upcoming vote will show if MPC members are considering changes to current monetary policy.
10:00 — Bank of Canada Rate Statement:
The Bank of Canada has maintained a relatively hawkish stance over the last few statements, but is expected to keep rates steady at 1% amid slow economic growth. Investors will be closely eying any change in tone that might indicate when the bank will eventually raise rates.
10:00 — Bank of Canada Monetary Policy Report:
Bank of Canada is expected to trim its economic forecast owing to vulnerability to US economic growth, weaker commodity prices, and smaller than previously expected growth in the country over the second half of 2013. The Canadian central bank now expects economic growth of 2% to 2.5% over the last six months of 2013 vs. an earlier estimate of 3.2%.
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 18, 2013.
Thursday, October 24
08:30 — US Unemployment Claims:
Weekly report will refer to changes in initial jobless claims for the week ending on October 18, 2013. Last week jobless claims decreased by 15K to reach 358K. This upcoming weekly update may affect the US dollar and consequently commodities and stocks markets.
10:00 — US New Home Sales:
This report will present new home sales for September 2013. In August, new homes rose to an annual rate of 421,000 — a 7% rise (month-over-month). Given the decline in affordability due to rising mortgage rates, the data might disappoint raising concerns about the housing market recovery.
Friday, October 25
04:30 — UK Preliminary GDP Q3 2013:
This report will present a preliminary estimate of Q3 growth rate for the British economy. During Q2 2013, Britain's economy expanded by 0.6% (Q-2-Q). Consensus expectations call in for a growth in GDP of 0.8% in Q3 2013.
09:55 — Revised University of Michigan Consumer Sentiment:
University of Michigan will publish its revised consumer sentiment monthly report. In September, the sentiment index decreased to 77.5 from 82.1 in August. Given the backdrop of government shutdown, consumer sentiment is expected to come weak, with current expectations for a reading of 75.3.
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.