The Atlanta Fed GDPNow
model forecast for real GDP growth (seasonally adjusted annual rate) in
the second quarter of 2016 came in at 2.4 percent on July 19, unchanged from the July 15 forecast.
The
forecast for second-quarter real residential investment growth ticked
up from -3.2 percent to -3.1 percent after this morning's new
residential construction release from the U.S. Census Bureau.
The Fed is facing moderate growth in the U.S. and the timing of its
next interest rate hike will be affected by the ongoing presidential
electoral campaign. The Federal Open Market Committee (FOMC) meeting in
July due to not featuring a press conference following the release of
the statement had always been an unlikely candidate. The September
meeting has 20 percent probability and the last meeting of the year on
December 14 has over 50 percent with the added benefit of not
interfering with the presidential elections.
The Federal Open Market Committee (FOMC) statement will be released
on Wednesday, July 27 at 2:00 pm EDT. There is no change expected to the
Fed benchmark rate and since this monetary policy meeting is not
followed by a press conference the language in the statement will be the
main focus as analysts try to gleam insight from the document.
The EUR/USD has lost 0.035 in the past 24 hours. The single currency
is trading at $1.0990 after the U.S. dollar received a boost from the
consumer confidence data released by the Conference Board. The household
survey showed an improvement in consumer confidence up to 97.3 well
above the forecast and inline with the past month’s print despite the
Brexit aftermath.
The Fed is not expected to make the first move as other central banks
have more mounting pressure to act. The USD would gain from further
easing from Europe, Japan or the United Kingdom. The European Central
Bank (ECB) held interest rates and its quantitive easing (QE) on hold as
expected on Thursday, July 21. The EUR is weaker against major pairs
after there was not clear signal on what the next step for the central
bank is despite the anticipated negative effect of the Brexit vote on
European growth by forecasters.
The Fed has been forced to relive 2015 where more was expected from
the market but in the end only one rate hike materialized. The U.S.
economy continues to be the one that is growing at a slow but steady
pace in comparison to other major economies battling deflation.
The USD will be directly impacted by the language used in the FOMC
statement. Investors will be going through the documents trying to get
insights on the Fed’s view on the jobs market, inflation, growth and
global events. Another point to consider is the vote split. Kansas City
Fed President Esther George dissented in March and April but rejoined
the hold camp in June. Given the positive signs form the U.S. economy
and the limited impact of the Brexit shock she might once again push for
a rate hike in July breaking rank with the rest of Fed FOMC voting
members.
US June durable goods orders -4.0% vs -1.4% expected
Durable goods orders for June
Prior was -2.3% (revised to -2.8%)
Ex transportation -0.5% vs +0.3% expected
Prior ex transportation -0.3% (revised to -0.4%)
Non-defense capital goods orders ex-air +0.2% vs +0.2% exp
Prior non-defense capital goods orders ex-air -0.4% (revised to -0.5%)
Capital goods shipments nondefense ex air -0.4% vs +0.4% exp
The important number is non-defense capital goods orders ex-air and it was bang-on expectations so this isn't as bad as the first headline looks. However, the shipments number is soft and that will be a drag on Q2 growth.
The Atlanta Fed GDPNow estimate comes in at 2.4%.
Unchanged from the prior estimate.
Weekly US oil inventory data -2342K vs -2000K expected
US energy inventory and production data from the Energy Information Administration
US initial jobless claims 253k vs 265k exp
US initial jobless claims week ending 15 July 2016
July 2016 US Markit manufacturing PMI flash 52.9 vs 51.6
Details of the July 2016 US Markit manufacturing PMI flash report 22 July 2016
July 2016 US Dallas Fed manufacturing index -1.3 vs -10 exp
July 2016 US Dallas Fed manufacturing index report 25 July 2016
Philly Fed July non-manufacturing index at 28.8 vs 10.8 prior
Service sector data from the Philly Fed
Fed to Leave Rates Unchanged in July
The Fed is facing moderate growth in the U.S. and the timing of its next interest rate hike will be affected by the ongoing presidential electoral campaign. The Federal Open Market Committee (FOMC) meeting in July due to not featuring a press conference following the release of the statement had always been an unlikely candidate. The September meeting has 20 percent probability and the last meeting of the year on December 14 has over 50 percent with the added benefit of not interfering with the presidential elections.
The Federal Open Market Committee (FOMC) statement will be released on Wednesday, July 27 at 2:00 pm EDT. There is no change expected to the Fed benchmark rate and since this monetary policy meeting is not followed by a press conference the language in the statement will be the main focus as analysts try to gleam insight from the document.
The Fed is not expected to make the first move as other central banks have more mounting pressure to act. The USD would gain from further easing from Europe, Japan or the United Kingdom. The European Central Bank (ECB) held interest rates and its quantitive easing (QE) on hold as expected on Thursday, July 21. The EUR is weaker against major pairs after there was not clear signal on what the next step for the central bank is despite the anticipated negative effect of the Brexit vote on European growth by forecasters.
The Fed has been forced to relive 2015 where more was expected from the market but in the end only one rate hike materialized. The U.S. economy continues to be the one that is growing at a slow but steady pace in comparison to other major economies battling deflation.
The USD will be directly impacted by the language used in the FOMC statement. Investors will be going through the documents trying to get insights on the Fed’s view on the jobs market, inflation, growth and global events. Another point to consider is the vote split. Kansas City Fed President Esther George dissented in March and April but rejoined the hold camp in June. Given the positive signs form the U.S. economy and the limited impact of the Brexit shock she might once again push for a rate hike in July breaking rank with the rest of Fed FOMC voting members.
read more
US June durable goods orders -4.0% vs -1.4% expected
Durable goods orders for June
The important number is non-defense capital goods orders ex-air and it was bang-on expectations so this isn't as bad as the first headline looks. However, the shipments number is soft and that will be a drag on Q2 growth.
June 2016 US advance goods trade balance -63.3bn vs -61.0bn exp
June 2016 US advance goods trade balance report 28 July 2016
Alongside this report the commerce department is now releasing and advance wholesale and retail inventory report.
US initial jobless claims 266k vs 260k exp