The Week Ahead: Feb. 8-14, 2016

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Two congressional appearances by Fed Chairwoman Janet Yellen, release of President Obama’s Fiscal Year 2017 budget proposals on Tuesday, and a batch of monthly USDA reports on Tuesday are the highlights of the week ahead in Washington.

All eyes will be on Washington for Fed watchers as Yellen will deliver two days of testimony on monetary policy via the so-called “Humphrey Hawkins” update to Congress. Her sessions start Wednesday before the House Financial Services Committee and moves to the Senate Banking Committee on Thursday. Most of the attention will come on Wednesday as her prepared remarks should not differ when she heads to the Senate Thursday. Questions from lawmakers both days of course have the potential to impact markets.

Other Fed officials on tap to appear are San Francisco’s Williams on Wednesday and Dallas Fed’s Kaplan on Friday. Williams doesn’t return to a voting role until 2018 but is seen as a close ally of Fed’ Chair Yellen while Kaplan will be a voter in 2017.

Beyond the testimony by Fed Chair Janet Yellen, there are other important hearings in the week ahead for Washington. Budget hearings gear up on the House side as Congress receives President Obama’s Fiscal 2017 budget plan Feb. 9. That budget proposal is again expected to recommend reductions in crop insurance spending, but several agency spending plans will get a review from lawmakers.

Ag-related hearings on tap include the Commodity Futures Trading Commission (CFTC), foot and mouth disease (FMD) readiness and the budget plan for the Office of the USDA Secretary. Plus, the session on EPA regulations and their impact on rural American – cancelled by the winter storm that hit Washington in January – also takes place on Thursday. Budget hearings are also on tap on the Senate side along with a session about a new Water Resources Development bill.

In Congress, differences over help for water cleanup in Flint, Michigan, and the markup of a bill to overhaul aviation oversight will be key events. Senators seeking to pass energy legislation, S 2012 , will keep trying to break an impasse over linking the bipartisan bill to Democrats’ demands for federal aid to help Flint remedy its lead-polluted water supply.

North Korea sanctions. In the Senate, Majority Leader Mitch McConnell (R-Ky.) has set a Wednesday floor vote on HR 757, which would authorize the president to apply sanctions to individuals, foreign governments and financial institutions involved in prohibited transactions with North Korea. The measure is in response to the Pyongyang regime’s fourth nuclear test, with reports over the weekend of some type of missile test by North Korea.

In the House, the chamber will consider several measures on the floor, including:

– Restaurant nutrition labeling. The Food and Drug Administration would have to reissue rules requiring restaurants to display nutritional information on menus under HR 2017. The FDA issued rules in 2014 that require chain restaurants and retail food establishments with 20 or more locations to provide calorie and nutrition information for standard menu items. Establishments that fail to comply could face criminal or civil penalties. The new rules would allow businesses up to 90 days to fix a violation before they would face penalties.

– Debt limit. HR 3442 would require the Treasury secretary to report to Congress a detailed long-term debt-reduction plan whenever the country’s borrowing authority limit is set to be breached.

More consumer updates are due this week even though the economic data schedule is not overly jam-packed. The week opens with the Labor Market Conditions Index on Monday, followed by Wholesale Trade on Tuesday and the Treasury budget statement on Wednesday. Weekly jobless claims data comes on Thursday, with the biggest report slate arriving on Friday with Retail Sales, Import & Export Prices, Business Inventories and Consumer Sentiment. After the jobs data for Jan., traders will continue to look for data that either backs up the expectation that the Fed may not meet their projected four interest rate increases during 2016 forecast, or signals that market watchers are right in expecting perhaps two increases or less in the months ahead.

China enters its Lunar New Year Holiday, but there are still some economic updates planned for release. China’s Shanghai composite will be shuttered the entire week with the Hong Kong market closed through Wednesday. That could temper some of the market volatility that has been seen of late.

USDA’s February update on balance sheets for the US and other countries arrives on Tuesday via the Supply/Demand report. There are few changes on the US side expected, but there could be some notable global shifts given drought and other conditions around the globe. Also on Tuesday, USDA will release its updated farm income forecast, an outlook that will potentially be even more downbeat than their prior view in light of the commodity price situation and still stubbornly high costs faced by crop farmers. Traders will also monitor the Weekly Export Sales update due Thursday morning to see if the downturn in soybean sales to close out January continues and whether another strong round of US corn sales will be racked up.

Weather conditions in South America in particular will remain potential market movers. Traders will also keep an eye on Egypt and whether the country tenders again for wheat and issues an “official” statement relative to the level of ergot they’ll allow for imports of wheat. The country cancelled two tenders as February opened as exporters were reluctant to do business with the country.

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