US Credit Mkt Week Ahead: Final FOMC For 2018, Hut, Hut, Hike

     CHICAGO (MNI) - The week ahead should be quiet in the lead-up to the last

FOMC policy announcement of 2018 on Wednesday, December 19 (includes summary of

economic projections/dots, eagerly awaited after the Fed chairman's economic

outlook testimony was canceled due to the national day of mourning for President

Bush).

The Federal Reserve will exit it's self imposed blackout period that started at

midnight last Friday, December 7 and runs through Thursday, December 20.

Data highlights for the week ahead include Housing Starts on Tuesday, Existing

Home Sales on Wednesday, Leading Indicators on Thursday, Durable Goods and

Personal Income and Spending on Friday.

Upcoming U.S. Treasury auctions include 13W and 26W bill auctions on Monday.

Salient data highlights (estimates):

- Monday: Slow start with December Empire Manufacturing Index (21.0 est); NAHB

home builder index; net TICS flows; 13- and 26-week Treasury Bill auctions.

Nomura economists "forecast a decline to 21.0 from 23.3 for the Empire State

survey for December. Industrial sector data have so far shown still healthy

industrial activity."

Regarding NAHB home builder index, Nomura expects the "index to remain at 60 in

December after dropping from 68 in November. The single-family homebuilder

sentiment will gradually deteriorate further as the rising interest rates affect

not only consumer demand but also the construction costs of housing."

- Tuesday, Housing starts (1.220m est) and building permits (1.260m est) for

November; NY Fed Business Leaders Index; Redbook retail sales M/M; FOMC policy

meeting kicks off two day session.

- Wednesday: Existing home sales for November (5.15m est), FOMC policy

announcement (1400ET) followed by Fed Chair Powell press conference.

JP Morgan economists look for the Federal Reserve to raise rates 25 bps (funds

range to 2.25%-2.50%), while the statement "will drop the guidance of expecting

"further gradual increases" in the funds rate."

JP Morgan posits the "general deterioration in financial conditions will lead

the Committee to nudge down their growth forecast. Partly as a consequence, the

median interest rate forecast 'dot' for 2019 will likely slip from 3 hikes to

2."

JP Morgan further adds that if the Fed's stance does become less hawkish next

year, it would be due to a "faltering in the growth outlook, not a

disappointment in inflation or a shift in the Fed reaction function."

Societe Generale economists expect a "dovish " hike of 25 bps Wednesday, adding

it's "likely that the median funds rate projection for 2019 will come down, and

we also expect the distribution to narrow, with the higher dots moving lower." 

SocGen said the statement "will be tweaked to jettison the word "further" in

describing the gradual pace of hikes, but we suspect that it will be coupled

with a sentence indicating that the actual path of the funds rate will depend on

incoming data."

- Thursday: Aside from weekly claims and the Bloomberg comfort index for

December, Leading Indicators for November (flat estimate).

- Friday: Durable Goods and Personal Income and Spending, Q3 GDP (3.5% est).

Morgan Stanley economists anticipate durables goods orders "excluding

transportation to rise 0.3% in November, a decent gain after growth of 0.2% in

October." MS added the "overall durable goods measure rising 1.0% on the back of

a stronger month of aircraft orders."

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

17-Dec 0830ET Dec Empire Manufacturing Index (23.3, 21.0)

17-Dec 1000ET Dec NAHB home builder index (60, --)

17-Dec 1130ET US Tsys 13W bill auction

17-Dec 1130ET US Tsys 26W bill auction

17-Dec 1600ET Oct net TICS flows

17-Dec 1600ET Oct long term TICS flows

18-Dec 0830ET Nov housing starts (1.228m, 1.220m)

18-Dec 0830ET Nov building permits (1.265m, 1.260m) 

18-Dec 0830ET Dec NY Fed Business Leaders Index (8.6, --)

18-Dec 0855ET 15-Dec Redbook retail sales m/m (-0.5%, --)

18-Dec    -   FOMC policy meeting kicks off

19-Dec 0700ET 14-Dec MBA Mortgage Applications (1.6%, --)

19-Dec 0830ET Q3 current account balance (-$101.5B, -$124.5B)

19-Dec 1000ET Nov existing home sales (5.22m , 5.15m)

19-Dec 1030ET 14-Dec crude oil stocks ex. SPR w/w

19-Dec 1400ET FOMC policy announcement, in Washington.

19-Dec 1430ET Fed Chair Powell presser/SEP 

20-Dec 0830ET 15-Dec jobless claims (206k , --)

20-Dec 0830ET Dec Philadelphia Fed Mfg Index (12.9, 15.0)

20-Dec 0945ET 16-Dec Bloomberg comfort index (59.4, --)

20-Dec 1000ET Nov leading indicators (--, 0.00)

20-Dec 1030ET 14-Dec natural gas stocks w/w

20-Dec 1130ET US Tsy 4Y/4M Tips auction

20-Dec 1630ET 19-Dec Fed weekly securities holdings

21-Dec 0830ET Q3 GDP (3rd) (3.5%, 3.5%)

21-Dec 0830ET Q3 GDP Price Index (1.7%, 1.7%)

21-Dec 0830ET Nov durable goods new orders (-4.4%, -0.2%)

21-Dec 0830ET Nov durable new orders ex transport (0.1%, 0.6%)

21-Dec 0830ET Dec Philadelphia Fed Nonmfg Index

21-Dec 1000ET Dec Michigan sentiment index (f) (97.5, 97.5)

21-Dec 1000ET Nov personal income (0.5%, 0.3%)

21-Dec 1000ET Nov current dollar PCE (0.6%, 0.4%)

21-Dec 1000ET Nov total PCE price index (0.2%, 0.2%)

21-Dec 1000ET Nov core PCE price index (0.1%, --)

21-Dec 1000ET Nov BLS state payrolls

21-Dec 1100ET Q4 St. Louis Fed Real GDP Nowcast

21-Dec 1115ET Q4 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

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