The Week Ahead: Oct. 31-Nov. 6, 2016

10:02AM Oct 31, 2016
washington_DC_patriotic

Election shockwaves | FOMC | Employment report  


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Politics will stay as the focal point with the amount of time before the elections measured in days, not weeks. The late announcement last Friday that the FBI will examine more emails relative to the investigation into Hillary Clinton's use of a private email server could continue to have shockwaves in the election process. House and Senate races will also serve as a backdrop to the race at the top of the ticket for president, and close races in key states will be the ones most debated and discussed with the elections looming large.

Big economic reports are ahead, culminating on Friday with the key jobs update. But there are a host of reports that arrive before then. Monday leads off with Personal Income & Outlays, Chicago PMI and Dallas Fed Manufacturing updates, followed by Tuesday reports that include the PMI and ISM manufacturing reports and Construction Spending. Wednesday features the private-sector jobs report from ADP followed by Thursday releases that include Weekly Jobless Claims, Productivity & Costs, PMI Services Index, ISM Non-Manufacturing Index plus Factory Orders. Friday is when the October Employment report arrives along with International Trade. While much of the focus will be on the key Friday report, the other data could still impact trader expectations on the prospects for the Fed to increase short-term interest rates. That Fed focus may also dampen any market reactions to foreign economic updates as well. 

And the Fed will be the other major focus in the week ahead. The Wednesday conclusion of the Federal Open Market Committee (FOMC) meeting is widely expected to come without any policy change. Key will in part be on whether there are still going to be one or more Fed officials who dissent if there is no policy change – the September meeting featured three dissenting votes. There is no press conference following the meeting conclusion, so that means dissecting the post-meeting statement will be the major focus for traders on Wednesday afternoon as the search for clues on the Fed's next move. But there could be some clues arrive on Friday with appearances from two Fed officials – Dallas Fed's Kaplan (2017 voter) and Atlanta Fed's Lockhart (the next leader of the Atlanta Fed bank will be a voter in 2018 as Lockhart is exiting his post). 

Trade will stay in focus for agriculture and there will be two important updates on that front. The Weekly Export Sales report Thursday will be watched for another one of aggressive soybean purchases by foreign buyers and the Grain Inspections figures Monday will provide a signal on the level of exports that should be reported in the export sales update. Other agricultural updates that will be monitored include the Weekly Crop Progress and monthly Ag Prices report due on Monday, with Tuesday, November 1, bringing the batch of industrial reports, including oilseed and grain crush data, cotton use and wheat flour production. The week closes out with the monthly US Ag Trade Update which will provide the Fiscal 2016 agricultural trade conclusion and detail strong soybean exports which will likely bring an upward revision to USDA's export forecast for the year. Harvest weather looks open for the week ahead with some indications that Plains HRW wheat country could be in line for precipitation, which will help newly planted fields.


 

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.