The Week Ahead: April 10-16, 2017

Congress on recess | Travels abroad | USDA S/D report

The House and Senate are on their Easter recess and will not return in session until the week of April 24. But there will still be work in the intervening time.

Lawmakers must come to terms on a way to keep the government funded beyond April 28, so that will be center stage when they return. To accomplish that, it means there will be working ongoing during the next two weeks.

Attention will also be on the Trump administration and what additional officials are nominated to serve in the myriad of government posts at the higher levels in various government agencies. USDA Secretary-nominee Sonny Perdue will be up for a Senate vote on the day lawmakers return. Work will also be underway on getting US Trade Representative Robert Lighthizer’s nomination completed.

Vice President and Secretary of State to travel abroad. Vice President Mike Pence and Secretary of State Rex Tillerson each travel abroad this week. Pence will cross the Pacific for a 10-day swing through Asia, and Tillerson is heading to Russia after a two-day Group of Seven (G7) foreign ministers meeting in Italy. The meetings come just days after President Donald Trump and Chinese President Xi Jinping met April 6-7, where major topics discussed included trade and problems with North Korea.

It is an “odd” week ahead as markets will be closed Friday for Good Friday but the government will be open. That means there will be economic data that most traders will not get a chance to “trade” on except for bond traders as their market will close at 11 a.m. CT on Friday. As for the economic updates ahead, Monday opens with the Labor Market Conditions Index followed by Import and Export Prices and the Atlanta Fed Business Inflation Expectations updates on Wednesday. Thursday’s data list includes Weekly Jobless Claims, PPI-FD and Consumer Sentiment readings followed by key updates Friday with most markets closed – CPI, Retail Sales and Business Inventories. The attention will still be on how data plays into the Fed’s potential policy plans ahead. Expectations for the data will probably continue the optimistic side given recent trends. China economic data is also on tap, but that has lately taken figures outside to well outside of expectations to produce a market response.

The Fed calendar is relatively light but a key speaker is on the list – Fed Chairwoman Janet Yellen. She will appear in at the Gerald R. Ford School of Public Policy. The only other Fed official on tap is Minneapolis Fed’s Neel Kashkari on Tuesday. He is a voter this year and was the lone dissenting vote on raising rates in March. That does not mean we will not hear from other Fed officials in interviews with media outlets, etc. Traders will be trying to figure out what the Fed may be thinking ahead, not just on rates but now also on the balance sheet with the FOMC minutes from the March 14-15 session confirming that is on their discussion list.

Attention on USDA data will cover several days. Today’s update on Crop Progress will be watched, but with drought improvement in portions of Plains HRW wheat areas, traders may expect ratings to improve on winter wheat compared to the data released April 3. Tuesday will be the next focal point with the monthly Supply/Demand update due. The report is expected to feature higher US carryovers for corn, soybeans and wheat, plus higher soybean crops out of South America. On the foreign demand side, the Monday Grain Inspections and Thursday Weekly Export Sales figures will be important readings there. Also Thursday, USDA will release their annual update of their Crop Production Historical Track Records which provide details on how USDA estimates of acreage, production, yield and stocks data evolve during a season going back decades. On the weather side, traders will watch to see if conditions have fostered any Midwest crop planting and whether weekend rains in Argentina raise additional concerns on crops there.