All Eyes on FOMC as Market Waits for Rate Decision
Lots of data and the FOMC
This week promises to be eventful, especially on Wednesday, when we’ll get the FOMC’s (Federal Open Market Committee) rate decision, housing starts, and industrial production. The markets are convinced that the Fed will finally hike rates for the first time in almost a decade. In reality, this has probably been the most telegraphed rate hike ever.
The manufacturing and industrial production data will be interesting, and show us how much the appreciation of the US dollar impacted sales for manufacturers. Finally, on Thursday, we’ll get the Index of Leading Economic Indicators. Some data indicated a slowdown, so this number will be interesting as well.
Economic data this week
Here’s a rundown of this week’s economic data:
Monday, December 14:
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No economic data
Tuesday, December 15:
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Empire Manufacturing Index
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Consumer Price Index
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Real Average Weekly Earnings
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NAHB Housing Market Index
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TIC flows
Wednesday, December 16:
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MBA Mortgage Applications
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FOMC rate decision
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Housing Starts
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Building Permits
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Industrial Production
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Capacity Utilization
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Manufacturing Production
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Markit US Manufacturing PMI
Thursday, December 17:
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Initial Jobless Claims
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Bloomberg Consumer Comfort
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Index of Leading Economic Indicators
Friday, December 18:
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Kansas City Fed Manufacturing Index
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Markit US Services PMI
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Markit US Composite PMI
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Lennar Corp (LEN) earnings report
Impact on mortgage REITs
REITs such as Annaly Capital Management (NLY) and American Capital Agency (AGNC), and especially the non-agency REITs, will focus mainly on the FOMC meeting. The jobs report did nothing to change the forecast that the Fed moves this week. The big questions for REIT investors will concern the shape of the yield curve, or whether it will flatten or make a parallel shift. Investors who want to bet on interest rates can look at the iShares 20+ Year Treasury Bond ETF (TLT).
Impact on homebuilders
Builders such as CalAtlantic Group (CAA) and D.R. Horton (DHI) will focus on the numbers out of Lennar as well as housing starts and building permits. We’re entering the seasonally slow period for builders. This lasts about as long as football season. Investors can trade in the homebuilding sector through the SPDR S&P Homebuilders ETF (XHB).
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