Thanksgiving Headlines Holiday-Shortened Week
Who are we kidding? After the back and forth over trade and the impeachment hearings this Thanksgiving week comes as a welcome reprieve and everything else will take a back seat. Before the feeding frenzy, however, we do get a peak at personal income and spending for October. In conjunction with that, we also get the Conference Board’s Consumer Confidence Reading. Both reports are expected to be near recent trends with little evident anxiety by the all-important consumer. As trade talks sputter along, the October Goods Trade Balance Report tomorrow will garner some headlines with a slightly wider trade deficit expected versus September. Finally, new and pending home sales for October tomorrow and Wednesday, respectively will give us the latest look at housing activity. New home sales are expected to reverse September’s month-over-month decline while pending home sales are expected to be slightly up versus a flat September.
|Treasury Curve||Today||Week Change|
|3 Mo LIBOR||1.92%|
|6 Mo LIBOR||1.92%|
|12 Mo LIBOR||1.92%|
|Date||Statistic||For||Briefing Forecast||Market Expects||Prior|
|Nov 26||Advance Goods Trade Balance||Oct||-$71.3b||-$71.0b||-$70.4b|
|Nov 26||S&P CoreLogic CS Home Price Index||Sep||2.1%||2.00%||2.03%|
|Nov 26||New Home Sales (MoM)||Oct||1.0%||0.9%||-0.7%|
|Nov 26||Conf. Board Consumer Confidence||Nov||126.8||127.0||125.9|
|Nov 27||GDP Annualized (QoQ)||3Q S||1.9%||1.9||1.9%|
|Nov 27||Durable Goods Orders||Oct P||-0.7%||-0.8%||-1.2%|
|Nov 27||Personal Income||Oct||
|Nov 27||Personal Spending||Oct||0.3%||0.3%||0.2%|
|Nov 27||Pending Home Sales (MoM)||Oct||0.0%||0.3%||1.5%|
Top 5 Events for the Week
Nov 25 - 29, 2019
1. Thanksgiving Holiday –Thursday
2. October Personal Income & Spending –Wednesday
3. Conf. Board Consumer Confidence –Tuesday
4. October Goods Trade Balance–Tuesday
5. October New & Pending Home Sales –Tue./Wed.
We think it’s safe to say what the most anticipated event of this week will be. After the back and forth over US/China trade talks and the ongoing impeachment hearings everyone will be looking forward to the Thanksgiving holiday (and a long weekend for some). With the opportunity to eat, drink, and find fellowship with friends and family, (not to mention the possibility of political arguments erupting), Thanksgiving is easily the big event this week. For those traveling pack plenty of patience along with a heavy dose of good humor, and above all be safe.
2. October Personal Income and Spending -Wednesday
Given GDP’s recent reliance on consumer consumption the October income and spending numbers will be viewed closely for continued strength. For the month, income is expected to have increased 0.3% matching the increase in September. Spending is also expected to have increased 0.3% versus 0.2% in September. The Fed’s preferred inflation measure, core PCE, is expected to increase 0.2% for the month versus 0.0% in September while year-over-year it’s expected to remain unchanged at 1.7%. Core inflation started the year at 1.7% and after a mid-year dip is back where it started and still trailing the Fed’s 2% benchmark, which will allow the Fed latitude to cut again if economic numbers start to weaken from current levels.
3. October Conference Board’s Consumer Confidence—Tuesday
As mentioned above, GDP growth has been almost totally reliant on the consumer of late so given the outsized importance of consumer consumption measuring the consumer’s confidence is critical to predicting their future spending patterns. In that regard the Consumer Board’s Consumer Confidence report tomorrow is expected to post a modest sequential increase to 127.0 versus 125.9 in September. The high reading was 138 a year ago while the twelve-month average has been 129. Thus, expectations are for a slight sequential increase but still remaining below the twelve-month average. In essence, still strong confidence numbers should buttress the case for continued consumer spending.
4. October Goods Trade Balance—Tuesday
The monthly trade balance reports have been carrying a little more weight now that the latest trade talks hang in the balance. For October, the goods trade balance is expected to widen slightly to -$71.0 billion versus -$70.4 billion in September. The trade deficit has ranged from a twelve-month wide of -$79.9 billion in February to a narrow -$69.9 billion in December. The deficit was -$76.1 billion a year ago, so with all the trade-related headlines and tariffs, the deficit is expected to have narrowed by $5 billion over the last year.
New home sales are based on contract signings so they are a timelier look at the market compared to the more stale closings on existing sales; however, new homes sales represent just 10% of the market. In any event, new home sales for October are expected to have increased 0.9% to 707 thousand annualized versus September’s dip of -0.7% or 701 thousand annualized units sold. The average over the past year has been 650 thousand annualized so both a sequential increase and beat of the annual average is expected and that aligns with the bulk of recent housing numbers.
Thomas R. Fitzgerald
Director, Strategy & Research