US Credit Mkt Wk Ahd: Powell's Inaugural MonPol Testimony

     CHICAGO (MNI) - While the Federal Reserve's Semi-Annual Monetary Policy

Report was released Friday, focus in the week ahead will be on Fed Chair

Powell's testimony before the House Financial Services Committee on Tuesday at

1000ET (statement released at 0830ET), hopefully providing additional policy

insight during the question and answer session.

     Note, due to "changes to the House schedule" the Financial Services

Committee announced Friday the testimony would be rescheduled from Wednesday to

Tuesday.

     Little new information was gleaned from Friday's report that reiterated

several talking points that the committee expects "further gradual adjustments

in the stance of monetary policy" while inflation remains below 2% target, shows

signs of rising in recent months while risks to financial stability remain

moderate on balance.

     Meanwhile, St. Louis Federal Reserve Bank President James Bullard will

discuss U.S. Economy and Monetary Policy early Monday (0800ET) at the 34th

Annual NABE Economic Policy Conference in Washington, with audience Q&A.

     Following last week's generally hawkish minutes from the January FOMC, JP

Morgan economists remain confident "that there will be more hikes this year than

the three anticipated by the median SEP forecast 'dot' back at the December FOMC

meeting."

     JP Morgan said "next week's most prominent release will be 4Q GDP on

Wednesday (we expect a 2.5% reading). Also worth noting is that the February

employment data will not be released until March 9.

     Economists from Nomura "expect Powell to signal policy continuity in the

near term and acknowledge the near-term growth effects of fiscal policy and the

longer-term deficit and debt implications."

     Being his first testimony before the House Financial Services and Senate

Banking Committees on Tuesday and Thursday respectively, the Fed chairman "may

frame his arguments in a new way, which may generate surprises," Nomura

cautioned. 

     "That said, we do not expect him to intentionally signal a change in policy

direction, including an acceleration in the pace of rate hikes, during his

testimony.

     On upcoming data, Nomura said "core PCE prices will likely garner much

attention from markets. Our January core PCE inflation forecast is a steady 0.2%

m-o-m (0.218%) gain, which would translate into 1.5% y-o-y growth, unchanged

from the previous month's pace. Together with PCE food and energy prices, we

expect a 0.329% m-o-m increase in topline PCE prices, which will likely lower

the y-o-y rate to 1.6%, from 1.7%."

     Deutsche Bank economists "fully expect" Powell to "reiterate that a

'gradual' path of policy normalization remains the order of the day. However, he

will also likely discuss emerging upside risks to the growth outlook in the wake

of recent fiscal policy changes."

     Deutsche Bank added Fed chairman Powell "will likely convey the message

that with an improving growth and labor market outlook, the Fed continues to

gain confidence that the inflation side of its dual mandate will soon be met."

     On upcoming data, Deutsche Bank noted "since January's core CPI print came

in stronger than consensus on the back of a pickup in medical services," they

"expect a similarly strong print for the core PCE deflator (+0.3% forecast vs.

+0.2% previously), particularly as the healthcare industries series in last

month's PPI report showed the largest monthly gain in almost a decade."

     Furthermore, in-line with Deutsche Bank's "view that consumer spending will

take a bit of a breather in Q1. Personal income (+0.2% vs. +0.4%) is also likely

to moderate due to the dip in hours worked, likely a function of unseasonably

cold temperatures."

     Meanwhile, the Federal Reserve also continues to gradually reduce its $4.5

trillion balance sheet ($4.2 trillion in U.S. Treasuries and Agency MBS.)

Monthly Fed reinvestment caps consistent with the FOMC Sept. 20 decision and

June 2017 addendum:

MONTHLY CAPS ON SOMA SECURITIES REDUCTIONS

US TREASURIES.../AGENCY MBS/MONTH CAP 

- Oct-Dec 2017.. $6 billion./$4 billion 

- Jan-Mar 2018.. $12 billion/$8 billion 

- Apr-Jun 2018 $18 billion../$12 billion 

- Jul-Sep 2018 $24 billion../$16 billion 

- From Oct 2018** $30 billion $20 billion

Calendar of next week's market events (data, Fed speakers): 

- Feb 26 StL Fed Pres James Bullard on U.S. Economy/MonPol, 34th Annl NABE

Eco/Pol Conf, Washington, audience Q&A. 0800ET

- Feb 26 Jan new home sales (625k, 647k) 1000ET

- Feb 26 Jan bldg permits revision (1.396m, --) 1000ET

- Feb 26 Feb Dallas Fed manufacturing index (33.4, --) 1030ET

- Feb 26 US TSY TO SELL $51.000 BLN 13W BILL, SETTLE MAR 01, 1130ET

- Feb 26 US TSY TO SELL $45.000 BLN 26W BILL, SETTLE MAR 01, 1130ET

- Feb 27 Fed Chair Powell's semiannual monpol statement release, DC 0830ET

- Feb 27 Jan Durbl goods new ordrs (2.8%, -2.9%)/ex trans(0.7%, 0.1%) 0830ET

- Feb 27 Jan adv goods trade gap (-73.3b USD, --) 0830ET

- Feb 27 Jan adv retail inv (0.2%, --), wholesale inv (0.4%, --) 0830ET

- Feb 27 24-Feb Redbook retail sales m/m (-0.7%, --) 0855ET

- Feb 27 Dec FHFA Home Price Index (0.4%, --), Qrt Home $ (1.37%, --) 0900ET

- Feb 27 Dec Case-Shiller Home Price Index (0.7, --) 0900ET

- Feb 27 Fed Chair Powell to delivers semiannual monpol testimony before House

Financial Services Committee, Washington. 1000ET

- Feb 27 Feb Richmond Fed Mfg Index (14, --) 1000ET

- Feb 27 Feb Conference Board confidence (125.4, 126.0) 1000ET

- Feb 27 Feb Dallas Fed services index (22.2, --) 1030ET

- Feb 27 US TSY TO SELL $22.000 BLN 52W BILL, SETTLE MAR 01 1130ET

- Feb 27 Jan farm prices 1500ET

- Feb 28 23-Feb MBA Mortgage Applications (-6.6%,--) 0700ET

- Feb 28 Q4 GDP (2nd) (2.6%, 2.5%) 0830ET

- Feb 28 Q4 GDP Price Index (2.4%, 2.4%) 0830ET

- Feb 28 Feb ISM-Milwaukee Mfg Index (63.40, --) 0900ET

- Feb 28 Feb MNI Chicago PMI (65.7, 64.5) 0945ET

- Feb 28 Jan NAR pending home sales index (110.1, --) 1000ET

- Feb 28 23-Feb crude oil stocks ex. SPR w/w (-1.62m bbl, --) 1030ET

- Mar 01 Feb NA-made light vehicle sales SAAR (12.8m, 12.9m)

- Mar 01 24-Feb jobless claims (222k, 228k) 0830ET

- Mar 01 Feb personal income (0.4%, 0.3%) 0830ET

- Mar 01 Feb current dollar PCE (0.4%, 0.2%) 0830ET

- Mar 01 Feb total PCE price index (0.1%, --) 0830ET

- Mar 01 Feb core PCE price index (0.2%, 0.3) 0830ET

- Mar 01 Feb Markit Mfg Index (final) (55.9, --) 0945ET

- Mar 01 25-Feb Bloomberg comfort index 0945ET

- Mar 01 Feb ISM Manufacturing Index (59.1, 58.6) 1000ET

- Mar 01 Jan construction spending (0.7%, 0.3%) 1000ET

- Mar 01 23-Feb natural gas stocks w/w (-124Bcf, --) 1030ET

- Mar 01 28-Feb Fed weekly securities holdings 1630ET

- Mar 02 Feb ISM-NY current conditions (72.5, --) 0945ET

- Mar 02 Mar Michigan sentiment index (f) (99.9, 99.5) 1000ET

- Mar 02 Q1 St. Louis Fed Real GDP Nowcast (+2.74%, --) 1100ET

- Mar 02 Q1 NY Fed GDP Nowcast (+3.1%, --) 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$]