The week ahead is extremely light on new data, with virtually nothing from the US hitting markets until the jobless claims report on Thursday morning. Coupled with the labor data are two reports on the nation’s debt, the budget gap and the trade deficit ― both are which are expected to be rising.
That’s not to say it will be a quiet week in the markets. India’s central bank purchased 200 tonnes of gold from the IMF last week, sending prices of the precious metal past $1,100 per ounce for the first time ever. The quantity of the purchase itself isn’t shocking but it could signal that Asian countries are diversifying away from the greenback. Speculation on that alone will keep commodity and currency markets busy all week.
Crude oil continues to trade around $80 per barrel, but cost expectations are rising as the global economy rebounds. The Financial Times points out that long-dated oil prices are closing in on the $100 mark. Prices for late 2017 futures moved up 10% in the past month alone.
In fixed income, the benchmark 10-year Treasury yield rose more than 11 basis points last week to 3.50%. Yields are now at 3.52% ahead of three auctions on Monday, two on Tuesday, and one on Thursday.
Two hours before the opening bell, equities are looking to open higher after a volatile week left stocks up 3.19%. S&P futures are up 1.03%, Dow futures are up 0.85%, and Nasdaq futures are pointing 0.90% higher.
Key Events This Week:
Monday:
No major data to be released.
- Treasury Auctions:
- 11:30 ― 3-Month Bills
- 11:30 ― 6-Month Bills
- 1:00 ― 3-Year Notes
Tuesday:
The weekly retail reports hit markets at 7:45am and 9:55am, but major data is set for release.
9:15 ― Dennis Lockhart, president of the Atlanta Federal Reserve, speaks at the Urban Land Institute conference in Atlanta.
10:00 ― Janet Yellen, president of the San Francisco Federal Reserve, gives her outlook on the economy and the housing market to Lambda Alpha International in Phoenix.
7:30pm ― Richard Fisher, president of the Dallas Federal Reserve, gives his economic outlook to the Austin Headliners Club in Austin.
- Treasury Auctions:
- 1:00 ― 10-Year Notes
- 1:00 ― 4-Week Notes
Wednesday:
No data will be released on Veterans Day and the Treasury market is closed, but the stocks and futures market will be open.
Thursday:
8:30 ― Initial Jobless Claims averaged 524,000 per week in October, an improvement from the 549k average in September but still a far cry from suggesting stabilization. The unemployment rate is 10.2% and the economy is now growing at a decent pace of 3.5%, yet lay-offs continue regardless. The first week of November is expected to see 512k new jobless claims. If there’s good news, it’s that continuing claims have been falling for seven consecutive weeks ― now at 5.886 million ― yet much of that decline can be attributed to benefits expiring rather than job creation.
2:00 ― Data from Bloomberg says the average deficit for October has been $61.7 billion over the past ten years. If only . . . After a record-breaking deficit in fiscal year 2009, 2010 isn’t beginning on a hopeful note. The Treasury Budget Statement is set to begin the year with a monthly gap of $150 billion, more than triple the $46.6 billion deficit in FY October 2009.
- Treasury Auctions:
- 1:00 ― 30-Year Bonds
Friday:
8:30 ― One debt figure just wasn’t enough this week. The Trade Balance is expected to show the monthly gap between imports and exports widening in September to -$32.5 billion from -$30.7 billion in August.
“The price of oil imports was probably little changed, but oil import volumes likely jumped sharply, reversing a dip in August,” said economists Brian Bethune and Nigel Gault from IHS Global Insight. “More broadly, we expect to see both export and import volumes rising, underlining that the declines in August were a temporary interruption of a new upward trend.”
Ian Shepherdson from High Frequency Economics has a different take, believing the deficit will drop to $29 billion, though the factors are temporary rather than, say, a surge in exports.
“An unexpected leap in Boeing aircraft deliveries raises the possibility of a significant, though temporary, drop in the headline deficit, though the core numbers remain volatile and anything can happen,” he said.
10:00 ― Consumer Sentiment fell in September despite expectations to the contrary. The 70.6 score is expected to inch up to 71.0 in this month’s survey from Reuters and the University of Michigan, but with unemployment numbers jumping into double-digits just as the survey calls were taking place, personally I wouldn’t be so confident.
“Recent increases in gasoline prices won't help strained household finances,” add economists from IHS Global Insight, who look for a dip to 68.0 in the survey. “We expect that real consumer spending growth will subside from an annual rate of 3.4% in the third quarter to 1.1% in the fourth quarter as a pullback in auto sales offsets gains in most other categories.”
