The Week Ahead: Feb. 20-26, 2017

Congress in recess all week | USDA Outlook Forum | Senate farm bill field hearing

Congress is out all week via its Presidents Day recess, with two key agriculture-related events the focus: USDA’s annual Agricultural Outlook Forum and the first Senate Agriculture Committee new farm bill field hearing in Manhattan, Kansas.

Both the House and Senate will be out in observance of Presidents Day. But the Senate Agriculture Committee will have their first farm bill field hearing Thursday in Kansas, home state of panel leader Pat Roberts. Beyond that, the Hill may be relatively quiet, but attention will continue to focus on the Trump administration.

With Scott Pruitt now in place as EPA Administrator, a fresh round of regulatory actions is expected, including the controversial Waters of the US (WOTUS) rule.

A new immigration executive order is expected to be unveiled during the week.

Other possible issues: The situation with Russia could also continue in the headlines, something the Trump administration may not welcome if it happens as they look for a new national security advisor. Contact between Trump and foreign leaders always has potential to make headlines. Markets especially will be watching for any details on tax policy, infrastructure or other fiscal policies they expect will help build US economic growth.

Housing and manufacturing updates will headline the holiday-shortened week with both regional and national activity updates. With federal government offices and markets closed Monday, the release schedule starts on Tuesday with the PMI Manufacturing Index flash followed by Existing Home Sales on Wednesday. The busiest day is Thursday with releases including Weekly Jobless Claims, Chicago Fed National Activity Index, FHFA House Price Index, PMI Services Flash and the Kansas City Fed Manufacturing Survey. The week closes out with data on New Home Sales and Consumer Sentiment. Traders will be viewing the data from the perspective of whether the positive trend that appears to be unfolding to start 2017 is indeed starting.

Chinese economic data releases on the week could also get some market attention, but the focus mostly remains on the domestic front so far. Traders will also continue to await any more information from the Trump administration on their tax or infrastructure plans.

Minutes from the January 31-February 1 Federal Open Market Committee (FOMC) arrive on Wednesday. Key there will be how much — if any — of a debate there was on increasing short-term interest rates at that session. The debate still could have been there, despite the unanimous vote to leave policies steady. Any signals on when Fed officials expect to raise rates will also be of note.

Should the minutes not shed enough light on that subject, there are some Fed officials on the schedule to deliver remarks as well. Cleveland Fed’s Mester (2020 voter) delivers remarks Sunday with appearances Tuesday by Minneapolis Fed’s Kashkari (2017 voter), Philadelphia Fed’s Harker (2017 voter) and San Francisco Fed’s Williams (2018 voter), with the first two potentially getting even more attention given their voting status. Fed Governor Powell is on the schedule Wednesday and the final scheduled appearance is Atlanta Fed’s Lockhart who will leave his post at the end of the month. The next Atlanta Fed leader will be in a voting role in 2018. Timing and pace of rate hikes will continue to be the focus.

Thursday and Friday will be the big agriculture focus as USDA’s Agricultural Outlook Forum will be held near Washington, DC, those two days. The opening session on Thursday will see USDA’s top economist present an update on the agriculture conditions and provide some numbers on crop potential. But the detailed balance sheet information on Friday will be even more in focus as traders try to get a read on what farmers may do for the year ahead. We already know that US wheat acres will be down, so the remaining crop mix and usage patterns will be key attention points.

USDA will also release an update to the Outlook for US Agricultural Trade and the monthly food price outlook. Besides the Agricultural Outlook Forum, markets will also monitor Tuesday’s Grain Inspections and Friday’s Weekly Export Sales updates, delayed a day by the Monday holiday. Other USDA releases on the week will focus on the meat sector, with the monthly Cold Storage (Thursday) and Cattle on Feed (Friday) reports. South American weather remains important, but traders are more concerned about when newly harvested corn and soybeans from the region will hit world markets.

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