The Week Ahead: Oct. 7-13, 2013

October 7, 2013 03:34 AM

via a special arrangement with Informa Economics, Inc.

Govwernment shutdown key focus

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

An uncertain week lies ahead for markets as they continue to monitor the government shutdown situation.

In Washington, it’s all about the shutdown and that is starting to merge into a focus on the debt limit. The latter is seen as a much bigger potential impact as while the government has shut down before, the US has never defaulted on its obligations – something the US Treasury Department says will happen if nothing is done by Oct. 17. And the hearings that are on tap may not unfold as scheduled as it was a mixed bag over the past week on which hearings actually took place and didn’t happen. A Senate Ag subcommittee is scheduled Tuesday to look at the need for a farm bill and the impact on small communities, while the House side has a hearing set on maritime transportation regs.

As with the first week of the shutdown, more economic data may potentially not be released in the week ahead. On the schedule of releases are Consumer Credit on Monday, International Trade on Tuesday, Wholesale Trade on Wednesday with the Producer Price Index, Retail Sales and Business Inventories all scheduled for Friday. Without a government shutdown resolution, those reports will not be released. However, the weekly jobless claims still should arrive and the Treasury Department could still issue their monthly budget statement. Besides those events, traders will also be able to get the Consumer Sentiment update since it is not government released information. Also of note: Wednesday’s release of the Federal Open Market Committee minutes. Those will be combed through for the debate on tapering the stimulus efforts. Otherwise, Fed speakers are on tap Tuesday and Thursday, with the attention now focused more than likely on any comments they make on the debt limit issues and how the government shutdown impacts the odds for tapering of the Fed’s asset purchases.

For agriculture, markets are going to be still left without a batch of data unless the shutdown is resolved. That includes Monday’s Crop Progress and Grain Inspections reports, Thursday’s Export Sales data and perhaps most importantly, the October Crop Production and Supply/Demand updates. Even if the government were to reopen, it’s not clear that the latter two reports would be able to be released on time as the shutdown halted the survey work for the production data in particular. Otherwise, traders will focus on weather and harvest, although again, doing so based on private reports as opposed to the government updates.

Debt Limit deadline likely Oct. 31 or Nov. 1, not Oct. 17. Treasury Secretary Jack Lew has repeatedly said the debt limit deadline comes on Oct. 17, when Lew has said he will exhaust available measures to conserve cash and begin relying entirely on incoming revenue. But Lew ducked questions Sunday about whether that means the nation would immediately default. He said that he cannot predict when he will run short of cash to make required payments and warned that lawmakers are "playing with fire" if they do not act fast to grant him additional authority to borrow. Private industry analysts have offered a more specific timetable, saying default is likely no later than Nov. 1, when the Treasury Department is scheduled to make nearly $60 billion in payments to Social Security recipients, Medicare providers, civil-service retirees and active-duty military service members. Some Republicans argue that missing such routine payments would not amount to a governmental default. They say that would occur only if the Treasury Department fails to make interest payments to investors. But that could happen as soon as Oct. 31, when the department is due to pay out $6 billion in interest.

Monday, Oct. 7
Economic reports: The Fed reports on August consumer credit, but other economic data are delayed until government shutdown ends.
Markets in China are closed.
US-EU trade negotiations canceled: Negotiators from the US and the European Union were to hold a second round of talks in Brussels on a trans-Atlantic trade deal, but the talks were canceled due to the US gov't shutdown.
USDA reports: USDA data are delayed until government shutdown ends.

Tuesday, Oct. 8
Markets closed in South Korea.

IMF: The International Monetary Fund (IMF) gives a briefing in Washington on the world economic outlook.
Federal Reserve: Cleveland Federal Reserve Bank President Sandra Pianalto speech on the economy and monetary policy in Pittsburgh. Philadelphia Federal Reserve Bank President Charles Plosser speech on the economy to Johnstown Chamber of Commerce.
Investing in small rural towns: Subcommittee. Senate Ag Committee Rural Economic Growth and Energy Innovation Subcommittee.
Economic reports: Small-business optimism index for September.

Wednesday, Oct. 9
SEC: Securities & Exchange Commission (SEC) Chair Mary Jo White gives the keynote address at the agency's securities enforcement forum in Washington.
Housing finance: Committee hearing. Senate Banking, Housing and Urban Affairs.
Future of surface transportation: Subcommittee hearing. House Transportation and Infrastructure Highway and Transit Subcommittee.
Economic reports: FOMC minutes


Thursday, Oct. 10
ECB President Mario Draghi speaks at the Economic Club of New York.
Finance ministers and central-bank governors of the Group of 20 begin their meetings in Washington.
Federal Reserve: St. Louis Federal Reserve Bank President James Bullard opening remarks at at conference in St. Louis. San Francisco Federal Reserve Bank President John Williams speech to business leaders in Boise, Idaho.
IMF seminar on the global economy.
Impact of default on financial stability and economic growth: Subcommittee hearing. House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee hearing to discuss maritime transportation regulations and their impact on safety, security, jobs and the environment.
Funding the nation's freight system: Committee hearing. House Transportation and Infrastructure Committee.
EPA vs American mining jobs: Subcommittee hearing. House Natural Resources Energy and Mineral Resources Subcommittee hearing to discuss EPA versus American mining jobs. The panel said it would focus on what it calls the Obama administration's regulatory assault on the economy.
Economic reports: Jobless claims


Friday, Oct. 11
IMF, World Bank: Annual meetings of the World Bank group and the IMF begin.
Impacts of gov't shutdown on economic security: Committee hearing. Senate Commerce, Science and Transportation Committee.
Economic reports: Consumer sentiment.

Sunday, Oct. 13
Treasury Secretary Jack Lew hosts the US-India Economic and Financial Partnership. Also in attendance: Fed Chairman Ben Bernanke.


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






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