The Week Ahead: November 28-December 4, 2016

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

Lawmakers are back in Washington after the Thanksgiving break. Getting things lined up for keeping the government open will still be the dominant focus for Congress as they have a deadline of December 9 for the current temporary spending measure. The Senate returns today and the House on Tuesday.

The House is scheduled to consider a bill that adjusts the systemic risk designation process established for banks under the Dodd-Frank Act. HR 6392, the Systemic Risk Designation Improvement Act of 2016, would change the way a bank is designated for its risk to the financial system. The measure, sponsored by Rep. Blaine Luetkemeyer (R-Mo.), would more closely base the regulation of financial institutions on risk rather than on asset size.

Democrats are scheduled to pick their next leader in the House, delaying that decision earlier this month. Key will be whether current Minority Leader Nancy Pelosi (D-Calif.) keeps her position or is replaced, potentially by Rep. Tim Ryan (D-Ohio).

There are some hearings on tap, including ones on long-term health care, sexual harassment at USDA, the Volkswagen emissions scandal, US border measures and education at the Department of Defense.

The process of staffing positions in the coming Trump administration will be a key focus, with President-elect Donald Trump holding meetings throughout the week in New York. The daily to intraday reports on who may be at the top of the list for key posts will stay as major debate points ahead, even as some of those reports could be totally off the mark in terms of who may end up in some of the top spots in the coming administration.

Full week ahead with a major economic update on Friday. The week will see the calendar flip to December, which means the first Friday in the month will bring the key jobs update. But ahead of that data, releases for the week include the Dallas Fed Manufacturing Index on Monday, with Tuesday releases including the second update on third-quarter GDP, the S&P Core Logic Case-Shiller HPI and Consumer Confidence. Wednesday updates will be ADP Employment, Personal Income & Outlays, Chicago PMI and Pending Home Sales followed by Thursday updates on Weekly Jobless Claims, manufacturing indices from PMI and ISM plus Construction Spending. And the November Employment report caps off the week. That will give markets plenty to digest but it would likely take a significant shift in the data to derail expectations the Fed will increase short-term interest rates when it meets December 13-14.

Foreign economic updates could get market notice, but it seems those updates have not caused much of a stir in US financial markets of late.

Fed speakers are set to deliver remarks Tuesday through Friday, with the first two out of the chute on Tuesday always voters on the Federal Open Market Committee (FOMC) – Fed Vice Chair Fischer and NY Fed’s Dudley. Those on the schedule Wednesday include Dallas Fed’s Kaplan (2017 voter), Fed Gov. Powell and Cleveland Fed’s Mester (current voter); Mester is also on the schedule Thursday. Capping off the week is Fed Gov. Tarullo, typically focused on banking regulatory issues, but he still could offer remarks on the jobs data.

The other Fed focus will be the Wednesday release of the Beige Book, the anecdotal recap of economic conditions in the 12 Fed Districts. That, if nothing else, will be a reminder that we’ll be just two weeks away from the December FOMC meeting conclusion. So the economic recap will be combined for signs things are still on track for a December rate rise. Again, it would likely take a significant departure there to shift expectations.

Financial conditions in rural America will be one of the focal points in the week ahead. USDA will update its Farm Income Forecast on Wednesday and it could show more pressure on farm financial conditions. Key will be the financial indicators like the debt-to-asset and debt-to-equity ratios. While they could tick higher, they still will remain well below those seen during the 1980s. USDA will also release its updated Forecast for US Agricultural Trade where the key will be whether USDA keeps its outlook for Fiscal 2017 intact or not. Odds are it will be adjusted. Monday brings the final scheduled weekly release of the Crop Progress report until April 3, 2017. The final winter wheat rating will be of note, but the cotton harvest situation will also be watched. From here, monthly updates from key states will be the source of data on how the winter wheat crop is holding up over the winter months.

Demand remains important, which will keep the Grain Inspections (Monday) and Weekly Export Sales (Thursday) reports as attention points for traders. Plus, Thursday will see the monthly release of the industrial reports USDA took over from Customs – Grain Crushings, Fats & Oilseeds and Cotton. South American weather could also come more into focus as December arrives.

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