This week, the final Federal Open Market Committee (FOMC) meeting on economic data and the Federal Reserve year will come to the fore.
Central bank officials are set to provide an assessment of how the economy has stabilized amid a resurgence of corona virus cases, which have sparked waves of renewed trade restrictions across the country.
Officials who chaired the FOMC meeting on Tuesday and Wednesday were engaged in a cautious tone. In their December Beige book or summary of events, published before each federal meeting, the central bank said most of the Federal Reserve districts were “classified as moderate to moderate economic expansion” and that four districts “did not describe any or all growth, and at least some sectors were below pre-epidemic levels.” Five descriptions indicated that there was. ”
Over the past several months many federal officials have reiterated that their monetary policy efforts are working very effectively in conjunction with strong financial incentives from congressional lawmakers, although those in Capitol Hill have been embroiled in a month-long stalemate over the size and purpose of another virus – Relief Bill.
In this regard, the revised summary of the central bank’s economic plans scheduled for release this week will be of particular interest. In September, federal officials improved their outlook for the U.S. economic recovery to see a 3.7% contraction in real gross domestic product (GDP) this year, or better than the 6.5% decline they expected in June. They expect the labor market to close at 7.6% in September and reach 4.0% by 2023, closing pre-epidemic levels. The Federal Reserve signaled in September that interest rates would be near zero until at least 2023.
“While the positive news on the vaccine front has brightened the central bank’s medium-term outlook, the time uncertainty about the virus’s path and financial outlook should still alert the FOMC meeting report and chair. [Jerome] Powell’s journalist, ”said Matthew Luchetti, chief economist at Deutsche Bank, in a statement on Thursday.
Importantly, the central bank could use the December monetary policy statement and press conference to discuss forward-looking guidance around property purchases, which was the key policy of its strategy to stimulate financial market activity during the corona virus crisis.
For now, the central bank buys $ 80 billion worth of treasuries every month under the deregulation program and buys $ 40 billion in mortgage support bonds. In a recent monetary policy statement, the central bank suggested that the buying rate should continue to be maintained, with the Treasury securities and agency holding mortgage-backed securities at least at current rates.
But within minutes of the central bank’s November meeting, the central bank added, “many purchasing committees have decided that they want to improve the property purchase guidelines as soon as possible,” and “most participants wanted to go for quality outcome guidance for property purchases. . In other words, the central bank may provide additional details this week on whether inflation, employment levels or certain combinations of the two – specific asset conditions – will encourage a change in the pace of property purchases.
“Officials have indicated that the buying momentum could be further conditioned on the basis of economic conditions. At the margin, borrowing will help reduce costs.
Retail
On Wednesday, the U.S. Department of Commerce is due to release its November retail report, which will look at how consumers spend their money during the major holiday shopping window.
Latest information on Black Friday and Cyber Monday spending distorted records, results with an increase in online purchases. Yet economists expect retail sales to turn negative in November for the first time in April.
Coincidentally, some noted that stores may have changed some holiday purchases from November to October, especially by selling earlier this year.
“Online sales rose sharply in October, but some strength seemed to be pulling forward since November, exacerbating weaker reading,” said Credit Suisse economist James Sweeney.
Consensus economists expect U.S. retail sales to fall 0.3% in November after a similar increase in October. This is the slowest increase since the April slump, as consumption fell following the early rise after the early spring locks were removed.
A major drag on retail sales in November could come from a drop in service-related costs as renewed accommodation restrictions and cold weather pressure measures in places such as restaurants and bars.
“High-frequency data on credit and debit card spending suggest a consistent recovery of commodity spending over the holidays, albeit at a very moderate pace compared to the summer,” Nomura economist Louis Alexander said in a note on Friday. “However, due to the impact of severe epidemics on food services and a sharp decline in vehicle sales, we expect a monthly decline of over 0.4% in total retail sales in November.”
“Many local authorities have reduced indoor dining capacity and hours in restaurants and bars as COVID-19 cases and hospital admissions soared in November,” he said. “In some populated areas (e.g. areas in Illinois and California), indoor food was completely discontinued. In addition, very cautious personal behavior in the midst of negative news may have weighed on receipts at restaurants.”
Economic calendar
Monday: ந / அ
Tuesday: Empire State Production Schedule, December (6.9 expected, 6.3 in November); Import prices were higher for the month, November (0.3% expected, -0.1% in October); Import prices year-on-year, November (-0.9% expected, -1.0% in October); Export prices are higher for the month, November (0.2% expected, 0.2% in October); Export prices year-on-year (November -1.6%); Industrial production over the month, November (0.3% expected, 1.1% in October); Efficiency utilization, November (73.0% expected, 72.8% in October); Net long-term TIC flows, October (September. 108.9 billion); Total net TIC flows, October (79.9 billion – in September)
Wednesday: MBA mortgage applications for the week ended December 11 (-1.2% in the previous week), the month above the retail advance, November (-0.3% expected, 0.3% in October); Autos retail over the month, except for November (0.1% in November, 0.2% in October); Retail sales over the automotive and gas months, excluding November (0.2% in November, 0.2% in October); Market US Product Purchasing Managers Index, early December (55.8 expected, 56.7 in November); Market US Services PMI, early December (56.0 expected, 58.4 in November); Commodity inventory, October (0.6% expected, 0.7% in September); NAHB Housing Market Schedule, December (88 expected, November 90); FOMC rate decision
Thursday: Building permit, November (1.558 million expected, 1.544 million in October); Housing starts, November (1.533 million expected, 1.530 million in October); Philadelphia Fed Business Outlook Index, December (20.0 expected, 26.3 in November); Initial unemployment claims, the week ending December 12 (823,000 expected, 853,000 in the previous week); Consecutive claims, the week ended December 5 (expected 5.7 million, up from 5.757 million in the previous week); Kansas City Fed Production Performance Schedule, December (expected 10, November 11)
Friday: Current account balance, 3 Q ($ 170.5 billion over 7 Q period, expected to be $ 187.4 billion)
Revenue Calendar
Monday: ந / அ
Tuesday: ந / அ
Wednesday: LENAR (LEN) before the market opens
Thursday: General Mills (GIS), before the Right Aid (RAT) market opened; FedEx (FTX) after market closure
Friday: Dorton Restaurants (DRI) before the market opens; Nike (NKE) after market closure
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Emily McCormick is a reporter for Yahoo Accounting. Follow her on Twitter: emily_mcck
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