The Week Ahead: September 19-25, 2016

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A stopgap funding agreement is needed in Congress with less than two weeks to go before the September 30 deadline. Other key issues include results of the two-day Federal Open Market Committee (FOMC) meeting which ends Wednesday, House consideration of its version of the Water Resources Development Act (WRDA), a Tuesday hearing on concentration in the agricultural seed and chemical industries, and a state of the US farm economy hearing on Wednesday, with USDA Secretary Tom Vilsack.

Senate CR procedural vote. In funding issues, Senate Majority Leader Mitch McConnell (R-Ky.) has scheduled the first procedural vote Monday on HR 5325, the Legislative Branch spending bill that will serve as the vehicle for a continuing resolution (CR) to fund the government in the fiscal year starting October 1. The chamber plans a cloture vote on a motion to proceed to the measure.

Unresolved funding issues include whether to include disaster aid for Louisiana and other states impacted by severe flooding, as well as a provision to block the transition to Internet oversight by an international organization. House Majority Leader Kevin McCarthy (R-Calif.) predicted that funding to combat the mosquito-borne Zika virus would be part of a deal on a CR.

The House plans to take up legislation, HR 5931, that would prohibit cash payments to Iran. Any payments from the US to Iran related to settling claims before the Iran-United States Claims Tribunal (IUSCT) in The Hague would have to be specifically licensed by the Treasury Department’s Office of Foreign Assets Control and routed through financial institutions rather than made using physical currency.

Financial holdings of Iranian officials, groups. The House will also consider HR 5461, a bill that would require the Treasury Department to report to Congress on the financial holdings of several high-ranking members of the Iranian government and other Iranian organizations.

Cost of proposed regulations. Another item on the House agenda is HR 3438, a measure that would bar federal agencies from implementing regulations with an annual economic cost of at least $1 billion until all related requests for judicial review are resolved.

President Barack Obama is expected to veto legislation, S 2040, that would allow September 11 victims and their families to sue the government of Saudi Arabia. The congressional timeline regarding any vote to override the expected veto is uncertain.

The House may act on its version of WRDA, which the Senate passed 95-3 on September 15. The House measure, HR 5303, like the Senate bill, S 2848, would authorize Army Corps of Engineers waterways dredging, dam and other infrastructure projects. A key difference is that the Senate measure contains aid to help Flint, Michigan, deal with lead-contaminated drinking water. Any House passage would move the bill to conference negotiations in October.

The House has several hearings, including exams on terrorism, housing, the FAST Act, a review of automobile mileage standards and a House Ag subcommittee will look at Chesapeake Bay rehab efforts. In the Senate, agricultural interests will keep a close watch on two hearings – the Senate Agriculture Committee examination of the US farm economy with USDA Secretary Tom Vilsack, a session which could yield news on several issues, and the Senate Judiciary Committee will host a hearing on agriculture seed and chemical mergers.

Climate change. Oversight of the Obama administration’s greenhouse gas guidance and the effects on climate change will be the topic of a hearing Wednesday before the House Natural Resources Committee. The guidelines were issued by the Council on Environmental Quality.

Thursday is the busy economic report day, but there are other updates during the week. The week opens with the Housing Market Index and then we skip ahead to Thursday when releases include weekly jobless claims, Chicago Fed National Activity Index, FHFA House Price Index, Existing Home Sales and Leading Indicators. The week wraps up with the PMI Manufacturing flash and Atlanta Fed Business Inflation report. The interpretation of the data by markets and how it may impact the potential for a Fed rate hike remains the focal point on data. Fed funds futures at the end of the week put 53 percent odds on a December rise but only a 15 percent chance at the upcoming Federal Open Market Committee (FOMC) meeting. While China data could impact markets, the data coming out of the country has not had the sway over markets that it did earlier this year.

Wednesday’s FOMC meeting conclusion looms large even if the market expectations for a rate rise are not very high. But the conclusion of the meeting Wednesday also includes the post-meeting press conference by Fed Chairwoman Janet Yellen, as traders will focus on whether she gives any guidance on when a rate rise could happen if it does not take place at the meeting. Plus, Fed officials will release their updated forecasts for the US economy and when they think the Fed will increase rates. The “dot” chart will be the main focal point in those updates. The week will close out with the lifting of the blackout period and there are Fed officials on tap to make comments – Philadelphia Fed’s Harker, Atlanta Fed’s Lockhart and Cleveland Fed’s Mester will appear on a panel at a Philadelphia event. Of the three, only Mester is a voter this year with Harker in that role in 2017.

The agriculture focus will continue on demand for record US corn and soybean crops, keeping the Weekly Export Sales data front and center. Traders will focus on the prospects for continued demand for US agricultural goods given the record crop forecasts. Weather forecasts will continue to be important, with the focus on any additional hefty rains like those that rolled through Iowa and other Midwest areas to close out last week. Other USDA data of note include Monday’s Crop Progress update where harvest will be the focal point. Friday’s updates include the monthly food price forecasts and the Cold Storage and Cattle on Feed reports. Agricultural observers will also pay attention to at least one hearing ahead next week in the Senate Ag Committee on the state of the US farm economy.

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