US Credit Mkt Wk Ahd: FOMC, BOE, BOJ Policy Highlight, NFP Fri

     CHICAGO (MNI) - The spotlight is on monetary policy announcements from the

FOMC, Bank of England and the Bank of Japan. Amid a slew of economic data, the

week caps off with employment data for July.

     US market activity remains muted ahead next week's two-day FOMC meeting,

with no changes in rate or forward guidance expected. FRA/OIS implying low

chances (6%) of hike next Wednesday, according to MNI's PINCH.

     RBC Capital Markets economists concur, adding next week's meeting and

"press statement should come and go with very little fanfare" as "things have

not shifted significantly enough to warrant any notable alterations."

     "Indeed, the idea that economic activity remains "solid" and that inflation

is at/near the 2% target remains true. Though the tariff tantrum has ramped up a

bit since the last FOMC confab, the core of the Fed is thus far unconvinced that

this warrants any material shift in the outlook," RBC said.

     Credit Suisse economists "expect the FOMC to leave rates unchanged, but the

policy statement is likely to note the recent firmer inflation data." 

     Nomura economists also do not expect a any rate change next week, but said

it's "possible that the post-meeting statement will add 'for now' when

describing the FOMC's plans for 'further gradual rate increases,' consistent

with Powell's prepared remarks at his semiannual testimony."

     "This subtle change in language would be consistent with the Committee's

continued pullback from forward guidance language employed during the aftermath

of the Global Financial Crisis," Nomura added.

     Before the start of the Fed's media blackout last Saturday, St. Louis Fed

President James Bullard reiterated his stance that "yield curve inversion is a

bearish signal" for the economy, that "imminent" inversion is a "real

possibility" that could be avoided by being more cautious in the pace of

tightening policy.

     Nevertheless, the door for two more rate hikes by year end has been left

open, MNI's PINCH model reflects 95% probability of a third hike at the

September 25-26 FOMC and near 69% for a fourth hike at the December 18-19 FOMC.

     Meanwhile, Eurodollar futures have pared back inversion of EDH0-EDM0 vs.

corresponding Greens (EDU0-EDM1) but remain inverted, implying expectations of

rate cuts late next year into 2020 as economy cools. As such, sporadic

Eurodollar option flow has seen better long put unwinds and buyers longer dated

calls this week amid muted summer volumes.

     On next week's data, Credit Suisse economists estimate the "employment cost

index to slow slightly to 0.7% in Q2. This would lift the YoY reading to a new

cycle high of 2.9%. We expect some moderation in July for the ISM manufacturing

index, to 59.5, after a sharp rise in June. This would still be an elevated

level. The new orders index has been above 60 for 14 consecutive months."

     On payrolls, CS expects jobs to "slow modestly to 185k in July after coming

in above 200K in the past two months. Wage growth has been gradually

accelerating and we expect average hourly earnings to increase 0.3% MoM. This

would keep the YoY growth rate unchanged at 2.7%. We expect the unemployment

rate to tick down to 3.9%."

     Nomura economists "expect a gain of 195k in July nonfarm payroll

employment, tightening the labor market further, with a 190k contribution from

private employers and a 5k gain from government."

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

- Jul 30 Jun NAR pending home sales index (105.9, --) 1000ET

- Jul 30 Jul Dallas Fed manufacturing index (36.5, --) 1030ET

- Jul 30 Jun farm prices (1.7%, --) 1500ET

- Jul 31 Q2 ECI (0.8%, 0.7%) 0830ET

- Jul 31 Jun personal income (0.4%, 0.4%) 0830ET

- Jul 31 Jun current dollar PCE (0.4%, 0.5%) 0830ET

- Jul 31 Jun total PCE price index (0.2%, 0.1%) 0830ET

- Jul 31 Jun core PCE price index (0.2%, --) 0830ET

- Jul 31 28-Jul Redbook retail sales m/m (0.3%, --) 0855ET

- Jul 31 May Case-Shiller Home Price Index (0.8, --) 0900ET

- Jul 31 Jul ISM-Milwaukee Mfg Index (60.18, --) 0900ET

- Jul 31 Jul MNI Chicago PMI (64.1, 63.1) 0945ET

- Jul 31 Jul Conference Board confidence (126.2, 127.0) 1000ET

- Jul 31 Jul Dallas Fed services index (22.4, --) 1030ET

- Jul 31 FOMC policy meeting day one

- Aug 01 Jul NA-made light vehicle sales SAAR (10.3m, --) 

- Aug 01 27-Jul MBA Mortgage Applications (-0.2%, --) 0700ET

- Aug 01 Jul ADP private payrolls (177k, --) 0815ET

- Aug 01 Jul Markit Mfg Index (final) (55.5, --) 0945ET

- Aug 01 Jul ISM Manufacturing Index (60.2, 59.4) 1000ET

- Aug 01 Jun construction spending (0.4%, 0.2%) 1000ET

- Aug 01 Aug help-wanted online ratio (1.18, --) 1000ET

- Aug 01 27-Jul crude oil stocks ex. SPR w/w (6.15m bbl, --) 1030ET

- Aug 01 FOMC policy meeting day two, Announcement 1400ET

- Aug 02 Jul challenger layoff plans (19.6%, --) 0730ET

- Aug 02 28-Jul jobless claims (217k, 218k) 0830et

- Aug 02 Jul ISM-NY current conditions (55.0, --) 0945ET

- Aug 02 29-Jul Bloomberg comfort index (59, --) 0945et

- Aug 02 Jun factory new orders (0.4%, 0.2%) 1000ET

- Aug 02 Jun factory orders ex transport (0.7%, --) 1000ET

- Aug 02 27-Jul natural gas stocks w/w (78Bcf, --) 1030ET

- Aug 02 01-Aug Fed weekly securities holdings

- Aug 03 Jul nonfarm payrolls (213k, 190k) 0830ET

- Aug 03 Jul private payrolls (202k, 190k) 0830ET

- Aug 03 Jul unemployment rate (4.0%, 3.9%)  0830ET

- Aug 03 Jul average hourly earnings (0.2%, 0.2%) 0830ET

- Aug 03 Jul average workweek, all workers (34.5hrs, 34.5H) 0830ET

- Aug 03 Jun trade balance (-$43.1B, -$45.6B) 0830ET

- Aug 03 Jul Markit Services Index (final) (56.2, --) 0945ET

- Aug 03 Jul ISM Non-manufacturing Index (59.1, 58.5) 1000ET

- Aug 03 Q2 St. Louis Fed Real GDP Nowcast 1100ET

- Aug 03 Q2 NY Fed GDP Nowcast 1115ET

--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,M$U$$$,M$$FI$,MN$FI$,MN$FX$]