The Week Ahead: December 12-18, 2016

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With the Fiscal Year 2017 stopgap funding bill through April 28 now signed into law, and a water resources bill completed, Congress is adjourned. The attention will clearly be on the process of the incoming Trump administration filling the myriad of positions to run a new administration.

The post of Secretary of State remains open, with latest media conjecture that President-elect Donald Trump will select Exxon Mobil Corp. Chief Executive Rex Tillerson, who met privately with Trump on Saturday, four days after their first meeting.

The time is nearing for a USDA secretary choice, with Politico signaling it will be a Democrat, Sen. Heidi Heitkamp of North Dakota, if she wants it. Others say a few more names are at the “top” of the list, including Sunny Perdue, which usually means we may not be close to getting that post filled in.

Inflation, manufacturing and housing data will be the key economic updates for the week ahead. The week opens with the Treasury Budget report on Monday, followed by data on Import & Export Prices on Tuesday. The pace picks up Wednesday, with the PPI-FD, Retail Sales, Industrial Production and Business Inventories reports due out, followed by releases Thursday that include CPI, Weekly Jobless Claims, Philadelphia Fed Business Outlook Index, Empire State Manufacturing and Housing Market Index. The week wraps on with reports Friday on Housing Starts and the Atlanta Fed update. The data will set the stage for how the US economy is setting up ahead of the holidays, the key time as consumers play a big role in how retailers fare in the final month of the year.

The conclusion of the Federal Open Market Committee (FOMC) meeting Wednesday will be the big focus. While a rate increase is fully expected, the real attention will be on the updated economic and policy forecasts from Federal Reserve members. Those have been typically revised lower with the outlook for improvement in the US economy extended further onto the horizon. But the new administration, while injecting uncertainty in the equation, has upped economic expectations ahead. It will be important to see if Fed members think a Trump administration will boost the US economy in 2017 and beyond. Biggest attention will be on the post-meeting press conference by Fed Chairwoman Janet Yellen. Her explanation of why the Fed increases rates as they are expected to will not be near the focus that it usually is. The attention will be on what or how she casts the forward guidance. And that could be key since Yellen and others on the Fed now view their forward guidance as essentially another monetary policy tool. So the Fed will have a delicate task on their hand on that front.

Demand will stay atop the focus for agricultural markets with the Monday Grain Inspections figures expected to show another strong update for soybeans. With record soybean production expected out of Brazil, traders may start to further scale back their expectations for sales of the oilseed in the Weekly Export Sales report. Plus, USDA has signaled they see that competition eating into the US sales pace ahead. Otherwise, there is little other data due out from USDA in the week ahead that will alter market thinking. Foreign weather developments could also catch some attention, but demand still is the overarching attention point for grain and soybean markets. Cash market action will be the guiding factor for cattle and hog futures as it has been in recent weeks.

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