US Credit Mkt Wk Ahd: US Gov Shutdown To Delay Data, Auctions

Repeats Story Initially Transmitted at 06:34 GMT Jan 22/01:34 EST Jan 22

     CHICAGO (MNI) - It's shaping up to be another relatively quiet week ahead

for data, that would have been the case even without the partial U.S. government

shutdown that started after midnight Friday.

     Avoiding the blame game, unless a continuing resolution is passed in the

interim, Friday's headline GDP and Durable Goods data from the Bureau of

Economic Analysis could likely be delayed.

     Impact of the U.S. government shutdown is "likely to be muted" the Wall

Street Journal wrote Saturday, as "many agencies plan to remain open with

existing funds while they last, and critical services are exempt from closure."

     In light of the shutdown, U.S. President Trump opted to cancel his trip to

his private Mar-a-Lago resort for a big ticket ($100-250K) gala event

celebrating his one year in office Saturday.

     More importantly, however, the president's plans to attend the World

Economic Forum in Davos, Switzerland on Wednesday (Davos event runs from January

23-26) is "up in the air," CNBC reported Sunday.

     "We're taking Davos, from the president's perspective and the Cabinet's

perspective, on a day-by-day basis," White House budget chief Mick Mulvaney told

reporters Saturday. CNBC noted "Bill Clinton was the first and, for now, last

sitting U.S. president to attend the World Economic Forum" back in 2000.

     Meanwhile, the Federal Reserve entered their communication blackout period

over the weekend.

     Though Chicago Fed president Charlie Evans is scheduled to make

introductory remarks for prior Chicago Fed president Michael Moskow during a

"Chicago Council on Global Affairs Conference: Future of Monetary Policy:

Embracing the Unconventional" in Chicago late Tuesday (1830ET), there will be no

discussion of monetary policy.

     Aside from economic data delays due to the shutdown, the US Treasury

department's 2-, 5- and 7Y note auctions may be delayed or pushed back. Of the

Treasury department's 88,000, 48,500 are expected to be furloughed (just over

55%).

     Deutsche Bank economists said the delay of data "is arguably the most

tangible impact of a partial closure of the federal government" and assuming the

shutdown is "short-term in nature would have little impact on the economy or the

Fed's outlook for rate hikes."

     Of note, a rate hike at the first FOMC policy announcement of 2018 on

January 30-31 is not expected by markets and would catch markets off balance.

Instead, markets are widely expecting a rate hike at the March 20-21 meeting

(MNI Pinch probability over 90%) while chances of a second hike at the June

12-13 FOMC have climbed over 50% in the past week.

     On the week's data, if "cooler heads in Congress prevail, DB said, the

"main focus will be Friday's advance GDP report for Q4 2017 (+3.3% forecast vs.

+3.2% previous), which will provide a benchmark for forecasters' current-quarter

and 2018 growth projections."

     If DB's "Q4 estimate is close to the mark, it would be the third

consecutive quarter of 3%-plus inflation-adjusted output growth and the economy

will have ended the year having expanded 2.7% (Q4/Q4), the best performance

since 2014 (2.7%)."

     On December durable goods orders, DB cites a "challenging seasonal factor

for aircraft orders may drag on headline durables (+0.5% vs. +1.3%), orders

excluding transportation (+1.0% vs. -0.1%) should rebound given December's

strong manufacturing data."

     JP Morgan economists "look for 3.1% headline growth, with drags from

inventories and international trade obscuring a sizzling 4.7% gain in domestic

final sales" and expect "real consumption to grow 3.9% and equipment spending

17.3%."

     JP Morgan said December durable goods "will likely show the beginnings of

some slowing in capital goods orders and shipments; we look for core capital

goods orders to be up 0.3% and headline durable goods orders up 0.6%."

     Due to better than expected domestic and foreign economic growth and data

amid an "absence of seasonal weakness that have plagued recent 1Qs" JP Morgan

has raised their "mid-year and year-end targets for 10-year Treasury yields to

2.70% and 2.85%, respectively."

     BNP Paribas economists "expect real GDP to have expanded by a strong 3.1%

q/q saar in Q4" while December durable goods should see "chunky non-defense

aircraft orders" boosting the "headline print to a strong 3.9% m/m."

     On the U.S. dollar, Citigroup strategists said "repatriation is coming to

the fore as a market theme, but we see only limited pass through to USD given

the likely lack of direct currency buying and the failure from equity gains to

pass through to currency strength."

     Citi said they expect continued US$ weakness, noting price action in the

prior government shutdown in October 2013 was mixed. Meanwhile, "if inflation

data continues to strengthen, we could see more curve steepening in the next few

weeks."

     Meanwhile, the Fed 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): 

- Jan 22 Chicago Fed National Activity Index (0.15, --) 0830ET

- Jan 22 $48B Tsy 13W bill auction, 1130ET

- Jan 22 $42B Tsy 26W bill auction, 1130ET

- Jan 23 Jan Philadelphia Fed Nonmfg Index  (29.4, --) 0830ET

- Jan 23 20-Jan Redbook retail sales m/m (-0.3%, --) 0855ET

- Jan 23 Jan Richmond Fed Mfg Index (20, --) 1000ET

- Jan 23 Dec BLS state payrolls (208.9k, --) 1000ET

- Jan 23 $26B Tsy 2Y note auction 1300ET

- Jan 23 Jan Treasury Allotments (p) 1500ET

- Jan 23 Chicago Fed Pres Evans introductory remarks of Michael Moskow during

"Chicago Council on Global Affairs Conference: Future of Monetary Policy:

Embracing the Unconventional" Chicago, 1830ET. No discussion of monetary policy

by Evans, Fed in Blackout period

- Jan 24 19-Jan MBA Mortgage Applications (4.1%, --) 0700ET

- Jan 24 Nov FHFA Home Price Index (0.5%, --) 0900ET

- Jan 24 Jan Markit Services Index (flash) (53.7, --) 0945ET

- Jan 24 Jan Markit Mfg Index (flash) (55.1, --) 0945ET

- Jan 24 Dec existing home sales (5.81m, 5.7M) 1000ET

- Jan 24 19-Jan crude oil stocks ex. SPR w/w (-6.86m bbl, --) 1030ET

- Jan 24 $15B Tsy 2Y FRN note auction 1130ET

- Jan 24 $34B Tsy 5Y note auction, 1300ET

- Jan 25 Dec advance goods trade gap (-70.9b USD, --) 0830ET

- Jan 25 Dec advance wholesale inventories (0.8%, --) 0830ET

- Jan 25 Dec advance retail inventories (0.1%, --) 0830ET

- Jan 25 20-Jan Jobless claims (220k, 241k) 0830ET

- Jan 25 21-Jan Bloomberg comfort index (53.8, --) 0945ET

- Jan 25 Dec new home sales (733k, 685k) 1000ET

- Jan 25 Dec bldg permits revision (1.302m, --) 1000ET

- Jan 25 Dec leading indicators (0.4%, 0.5%) 1000ET

- Jan 25 19-Jan natural gas stocks w/w  (-183Bcf, --) 1030ET

- Jan 25 Jan Kansas City Fed Mfg Index (14, --) 1100ET

- Jan 25 $28B Tsy 7Y note auction, 1300ET

- Jan 25 24-Jan Fed weekly securities holdings 1630ET

- Jan 26 Q4 GDP (adv) (3.2%, 3.0%) 0830ET

- Jan 26 Q4 GDP Price Index (2.1%, 2.3%) 0830ET

- Jan 26 Dec durable goods new orders (1.3%, 0.9%) 0830ET

- Jan 26 Dec durable new orders ex transport (-0.1%, 0.6%) 0830ET

- Jan 26 Q1 St. Louis Fed Real GDP Nowcast (3.47%, --) 1100ET

- Jan 26 Q1 NY Fed GDP Nowcast (3.1%, --) 1115ET

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

[TOPICS: MTABLE]