Good morning, traders. Welcome to our look ahead at the macroeconomic calendar this week, with an eye on those data points that are most useful for precious metals and Dollar traders. With Thanksgiving on Thursday, this is a truncated week; data that usual prints on a Thursday or Friday will all be packed into Wednesday morning which means there’s going to be a lot more white noise around the signals from PCE inflation and Durable Goods. It’s also important to keep in mind that trading volume tends to be much thinner on holiday weeks, so there’s always a risk of smaller moves being amplified by a low liquidity environment.
To begin the week, gold prices are solidly lower this morning with equities moving higher globally as risk-appetite has once again flowed back into the market, buoyed by another burst of rhetoric from the Chinese side that, for now, brightens the market’s outlook for US-China trade talks.
As I said, it’s a condensed holiday week in the markets, but there are a couple data points that could be important to building our picture for the end of 2019 and the start of 2020. Let’s jump in.
US Economic Data to Watch
Monday, November 25 at 7pm ET // Federal Reserve Chair Jerome Powell Speaks
FOMC boss Powell is scheduled to speak this evening at a chamber of commerce dinner in Rhode Island, with prepared text expected to be released. Low probability of any market impact at this kind of appearance this week, but it’s just good practice to keep Powell’s remarks on your radar.
Tuesday, November 26 at 9am ET // Case-Shiller Home Price Index (Sep)
[consensus expectation: +0.2% MoM // previous: -0.2%]
Similar to last week, just keeping an eye on the health of the US housing market. We saw some strong performance from October home sales, and I suspect with a light schedule this week we could see more positive housing data boosting the optimistic, risk-on mood around the US economy (even though this Case-Shiller number is reporting on an earlier month.)
Tuesday, November 26 at 1pm ET // Fed Governor Lael Brainard Speaks
Brainard isn’t always an automatic flag for me when he shows up on the speaking schedule; but given that he’s scheduled to be discussing the recent review of the Federal Reserve’s policy framework, there could be some interesting comments made here.
Wednesday, November 27 at 8:30am ET // Durable Goods Orders (Oct)
[(headline) consensus exp.: -0.7% MoM // prev.: -1.2%]
[(core) consensus exp.: flat MoM // prev.: -0.6%]
With analysts broadly anticipating a pullback in big-ticket orders in October, this is looking like the only data point that’s expected to possibly bring some headwinds to the Dollar and US stocks this week. As has been the case for most of this year, the downside in the headline number can probably be attributed to drag from still-weak aircraft orders; so, as long as the core number is at least close to flat, I don’t see this having long-term impact on the outlook for the US economy or the Greenback.
Wednesday, November 27 at 8:30am ET // Initial Jobless Claims
[consensus exp.: +220k // prev.: +227k]
Wednesday, November 27 at 8:30am ET // Personal Income & Personal Spending (Oct)
[(income) consensus exp.: +0.3% MoM // prev.: +0.3%]
[(spending) consensus exp.: +0.3% MoM // prev.: +0.2%]
Maybe appropriate for what looks to be a lightly attended trading week, data on Personal Spending and Income for October is expected to look little-changed from the month prior. Given the importance of active consumers in this stage of the US economic cycle, the spending number will always get a little more attention and so the fact that participants generally expect a mild tick higher will play well for Dollar bulls.
Wednesday, November 27 at 8:30am ET // PCE Price Index (Oct)
[(headline) consensus exp.: +1.4% YoY // prev.: +1.33%]
[(core) consensus exp.: +1.7% YoY // prev.: +1.67%]
The PCE inflation gauge is also expected to look much like the prior month’s data set. Even without a material uptick in year-over-year price inflation, I expect this will be another tailwind for the Dollar and likely will put some amount of pressure gold prices, as “no news” will be good news for the FOMC and those participants in favor of keeping rates on hold in particular. I don’t expect an as-expected print to boost that much risk appetite, of course; even with the headline number expected to grow, it’s a small enough increase that it would be easily written off as a result of the inclusion of more volatile energy and food prices. As I mentioned at the start, with so much economic data being dumped at the same time on Wednesday morning It may take some extra effort to sort out the driver of any market shifts in gold, silver, or the Dollar. That said, given that PCE is still the FOMC’s preferred measure of inflation, it will be the most likely culprit in any detectable move.
And that’s how our (mostly abbreviated) week looks, traders. I wish you the best of luck in your markets this week, as always; and for those of us in the States, I hope you have a wonderful Thanksgiving with friends and family. For those who are around, I’ll have a brief recap of the week for you on Friday, and then I’ll see the rest of you back here on Monday as we start the final month of the trading year.