The three areas that have the greatest ability to impact backend pricing this week are: (1) Central Bank Palooza, (2) Jobs, Jobs, Jobs and (3) Coronavirus.
(1) Central Bank Palooza: The Reserve Bank of Australia will issue the latest interest rate decision and policy statement but the market focus will be on speeches by ECB President Christina Lagarde and our Fed Chair Powell who will testify before the Senate and House on Tuesday and Wednesday. Also, the Fed’s Beige Book will be issued on Wednesday.
(2) Jobs, Jobs, Jobs: There is a ton or jobs/wage related data this week culminating with Big Jobs Friday with Unemployment Rate, Non-Farm Payrolls and most importantly Average Hourly Earnings. Throughout the week will be ADP Private Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims and internal employment readings within the ISM releases.
(3) Coronavirus: It’s yet another “Medical Monday” (used be called “Merger Monday” in another day and time) where Moderna has joined the list of having a vaccine that is over 94% effective and is filing for emergency use approval with the FDA today. The key to this week though is the fact that the Senate is back in session after their holiday-recess and markets will be very reactive to any movement in talks on a stimulus package that may – or may not – be practical prior to January 20th. There is also a debt ceiling and looming government shut down right around the corner.
Taking it the House: The October Pending Home Sales Index showed a YOY gain of 20.2% and a MOM contraction of -1.1%. Basically, there simply isn’t enough available inventory to support sales at a higher level.
Manufacturing: The bellwether November Chicago PMI reading was very strong at 58.2 (any reading above 50 is expansionary). This was a slight pull back from October’s blistering reading of 61.1.
On Deck for Tomorrow
Reserve Bank of Australia Interest Rate Decision, ISM Manufacturing, Construction Spending, ECB President Lagarde and Fed Chair Powell.