US Cr Mkt Wk Ahead: US Gov Reopen, FOMC, Jobs, US/China Talks

Repeats Story Initially Transmitted at 23:40 GMT Jan 27/18:40 EST Jan 27

     CHICAGO (MNI) - U.S. President Trump announced Friday he would end the

partial government shutdown for three weeks, threatening to re-shutter the

government on February 15 if funding for his border wall is not agreed upon. 

     JP Morgan economists cite a "disappointing run of data surprises" pushed

their "preferred model's estimate of the risk of recession beginning within one

year above 40% in recent months, from 25% as recently as September. Although

this is a new expansion high, recession risks implied by the economic data have

remained relatively steady compared to those implied by financial markets, which

approached 80% at the market bottom in December."

     Nevertheless, JPM suggests fading their own model's signal as the partial

government shutdown has exaggerated recession risk that may also "prove

transitory if the just-announced shutdown deal succeeds in keeping the

government open."

     In the meantime, while BLS, Fed, and private-sector data releases have

remained unaffected, foreign trade, PCE and 4Q GDP are unlikely to be announced

this week due to the limited amount of time to collect, process and prepare for

a report.

     The FOMC policy announcement, jobs report, manufacturing ISM and auto sales

for North America and China/U.S. trade talks are the highlights for week ahead. 

     Nomura strategists "do not expect a major breakthrough" in the US/China

talks, but both side will likely "present a 'successful' message" with

"scheduled higher US tariffs after 1 March quickly approaching."

     So as not to interfere with the two-day FOMC policy announcement on

Wednesday, January 30 upcoming U.S. Treasury auctions 13-, 26- and 52W bills, 2-

(fix and FRN), 5- and 7Y notes will all come to market on Monday-Tuesday.

     Fed Chair Powell will host a press conference after the FOMC policy

announcement Wednesday while other speakers from the Fed will exit the media

blackout early Friday, February 1.

Salient data highlights (estimates):

     - Monday: Jan Dallas Fed manufacturing index; 13- and 26W bill, 2- and 5Y

note auctions.

     - Tuesday: Redbook retail sales; Case-Shiller Home Price Index for

November; Conference Board confidence (124.6); 2Y FRN and 7Y note auctions.

     RBS NatWest economists estimate the consumer confidence measure "may have

slipped again in January (forecast: 124.0) after it toppled 8.3 points to 128.1

in December (a five-month low). The December weakness in this measure was almost

entirely driven by the expectations component."

     - Wednesday: ADP private payrolls for December; NAR pending home sales

index; FOMC policy announcement (no rate change likely) followed by press

conference from Chairman Powell.

     Deutsche Bank economists said the ADP private jobs data (DB est: +175k)

"will anchor market expectations going into Friday's report from the

BLS"...while the partial government shutdown "should not have a noticeable

impact on nonfarm payrolls, but could put slight upward pressure on the

unemployment rate."

     TD Securities expects the Fed to remain on hold in addition to conveying a

"patient, even cautious, data-dependent approach to policy - but without nudging

markets in an even more dovish direction, given the gap between Fed projections

and market pricing."

     TD does "not expect any formal announcement regarding the Fed balance

sheet. "We see a fairly small chance that the Committee has fully resolved the

various issues it has been debating over the past several meetings. However, we

do see a much greater chance that Powell hints that runoff could end sooner than

commonly expected. We look for an October conclusion."

     - Thursday: Weekly claims; Q4 ECI (0.8%); Jan ISM-Milwaukee Mfg Index; MNI

Chicago PMI for January (62.5).

     - Friday: Nonfarm payrolls for January (177k); unemployment rate (4.0%);

average hourly earnings (0.2%); Michigan sentiment index (f) for February

(91.0); ISM Manufacturing Index for January (54.2); NA-made light vehicle sales

SAAR through the session. 

     Deutsche Bank economists said the employment report "should moderate from

last month's exceptional gains, the pace of job creation should be more than

enough to lower the unemployment rate a tenth to 3.8%."

     On average hourly earnings (DB est +0.2%) "should have the effect of

lowering the year-over-year growth rate of the series a tenth from its

post-recession high of 3.2%. However, if hours worked remain at 34.5 as we

anticipate, the payroll proxy for nominal income growth would rise to 5.5%

(year-over-year), matching its post-recession high."

Calendar of next week's market events (prior, estimate):

28-Jan 1030 Jan Dallas Fed manufacturing index (-5.1, --)

28-Jan 1130 US TSY $39B 26W bill auction (912796SB6)

28-Jan 1130 US TSY $40B 2Y note auction (9128285X4)

28-Jan 1300 US TSY $42B 13W bill auction (912796RJ0)

28-Jan 1300 US TSY $41B 5Y note auction (9128285Z9)

29-Jan Day one of two FOMC policy meeting

29-Jan 0855 26-Jan Redbook retail sales m/m (-1.5%, --)

29-Jan 0900 Nov Case-Shiller Home Price Index (0.4, --)

29-Jan 1000 Jan Conference Board confidence (128.1, 124.6)

29-Jan 1030 Jan Dallas Fed services index (-5.0, --)

29-Jan 1130 US TSY $26B 52W bill auction (912796RY7)

29-Jan 1130 US TSY $20B 2Y FRN note auction (9128285Y2)

29-Jan 1300 US TSY $32B 7Y note auction (9128286A3)

30-Jan 0700 25-Jan MBA Mortgage Applications (-2.7%, --)

30-Jan 0815 Dec ADP private payrolls (271k, --)

30-Jan 1000 Dec NAR pending home sales index (101.4, --)

30-Jan 1030 25-Jan crude oil stocks ex. SPR w/w

30-Jan 1100 TSY announces 3Y, 10Y, 30Y refunding

30-Jan 1400 FOMC policy announcement

30-Jan 1430 Fed Chair Powell press conference

31-Jan 0730 Dec challenger layoff plans (35.3%, --)

31-Jan 0830 26-Jan jobless claims (199k, --)

31-Jan 0830 Q4 ECI (0.8%, 0.8%)

31-Jan 0900 Jan ISM-Milwaukee Mfg Index (52.87, --)

31-Jan 0945 Jan MNI Chicago PMI (65.4, 62.5)

31-Jan 1030 25-Jan natural gas stocks w/w

31-Jan 1630 30-Jan Fed weekly securities holdings

01-Feb  -   Jan NA-made light vehicle sales SAAR (9.9m, --)

01-Feb 0830 Jan nonfarm payrolls (312k, 177k)

01-Feb 0830 Jan private payrolls (301k, 175k)

01-Feb 0830 Jan unemployment rate (3.9%, 4.0%)

01-Feb 0830 Jan average hourly earnings (0.4%, 0.2%)

01-Feb 0830 Jan average workweek, all workers (34.5hrs, 34.5hrs)

01-Feb 0945 Jan Markit Mfg Index (final) (54.9, --)

01-Feb 1000 Feb Michigan sentiment index (f) (90.7, 91.0)

01-Feb 1000 Jan ISM Manufacturing Index (54.1, 54.2)

01-Feb 1100 Q1 St. Louis Fed Real GDP Nowcast

01-Feb 1115 Q1 NY Fed GDP Nowcast

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MTABLE]