The Week Ahead; Fed Minutes, Housing Data, Markit PMI, Wal-Mart Earnings

U.S. investors have a short trading week ahead due to President’s Day on Monday and attention will focus to the Fed Minutes from the Federal Reserve’s last policy meeting due on Wednesday combined with a snapshot of more U.S. housing data, corporate earnings from Wal-Mart, and Markit PMI for both the U.S. and Eurozone.

Wal-Mart’s corporate earnings report is due on Tuesday morning before the market bell.

Retail investors will be paying close attention to Wal-Mart earnings report for more insight about the health of retail spending in the U.S.

Markit Flash Composite PMI is also due on Tuesday for France, Germany, Eurozone, and the U.S.

Last week, investors paid close attention to testimony from Fed Chairwoman Janet Yellen who provided her semiannual monetary policy report before the U.S. Congress.

Yellen spoke before the Committee on Banking, Housing, and Urban Affairs in the U.S. Senate and emphasized that the U.S. economy has made steady progress towards achieving the Fed’s dual mandate of maximum employment and price stability with inflation.

Yellen said that U.S. job gains averaged 190,000 per month during the second half of 2016, followed by an additional 227,000 jobs in January, while U.S. real gross GDP is estimated to have risen 1.9 percent in 2016, matching the same level as in 2015.

Consumer price increases, as measured by the personal consumption expenditures (PCE) index, rose 1.6 percent in the 12 months ending in December but still remains below the Fed’s 2 percent inflation target.

Yellen said that U.S. consumer spending rose at a healthy pace in 2016, boosted by steady income gains, increases in the value of Americans’ financial assets and homes, positive consumer sentiment, and low interest rates.

Sales of automobiles and light trucks reached their highest total annual sales on record in 2016.

Yellen pointed out that housing construction has trended up at only a “moderate pace” in recent quarters and said that while tight supply and ongoing labor market gains should provide some support to housing construction going forward, the recent increases in mortgage rates “may impart some restraint.”

Yellen admitted that business investment was flat throughout much of 2016, although it improved towards the end of the year, helped by a rise in spending on drilling and mining structures.

Yellen noted that some risks to the U.S. economy have come from weak foreign growth combined with the rise of the U.S. dollar over the past two years which have served to lower manufacturing output.

Yellen said that she and other Fed members expect the U.S. economy to continue expanding at a “moderate pace” with further gains coming in the job market and inflation.

Yellen explained that their outlook is reflected in the understanding about U.S. monetary policy remaining accommodative, the pace of global economic activity picking up over time, supported by accommodative monetary policies abroad.

Full U.S. Economic Calendar

Tuesday- Markit Composite PMI- U.S., France, Germany, Eurozone. Wal-Mart Earnings due before opening bell.

Wednesday- Fed Minutes (FOMC meeting 2/1), Existing Home sales (January), MBA Mortgage Applications Index

Thursday- Initial and Continuing Claims, FHFA Housing Price Index (Dec.), Natural Gas Inventories, Crude Inventories.

Friday- New Home Sales (January), Michigan Sentiment- Final (February)

Written By:

Johnathan Schweitzer



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