FED: Instant Answer Questions for November FOMC Statement
Nov-06 18:59
The Instant Answers questions that we have selected for the November FOMC statement are as follows:
- Size of rate move
- Number of dissenters
- Does the statement change the language on employment conditions?
- Does the statement change the language on inflation progress?
- Does the statement change the language on the balance of risks?
- Does the FOMC announce an end to QT?
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US FISCAL: FY2024 Deficit Set To Edge Up Vs 2023 In Line With CBO Estimate (1/2)
Oct-07 18:54
The final monthly Budget Statement of the last fiscal year is due out Thursday (though unconfirmed, official guidance is that it is out at 2:00 PM on the 8th business day of each month). Early median consensus is for a $21B deficit in the month, after a surprisingly high $380B deficit in August (the largest shortfall in 23 months). That would be only the second monthly surplus this year, after April, coinciding with key tax dates. There is a wide range of estimates though, from -$262B to +$150B, with an average of negative $64B. Recall that September's deficit was $90B larger than consensus expectations.
- The Congressional Budget Office's June fiscal update estimated estimated $4.89T in revenues versus $6.81T of outlays for a deficit of $1.92T for full FY2024 (Oct-Sep). Through the first 11 months of the fiscal year, expenditures have totaled $6.29T and revenues $4.39T for a deficit just under $1.9T.
- A September budget balance close to consensus would leave the 12-month balance at around $1.9T, so not far off the CBO's June forecast.
- MNI's rough calculation is that the deficit as a percentage of GDP will be 6.6% for the full fiscal year, a little below the CBO's 6.7% forecast (and mainly due to slightly stronger-than-anticipated nominal economic growth), up from 6.3% in FY2023.
COMMODITIES: Crude Rises To Highest Since August As Geopolitical Tensions Mount
Oct-07 18:51
- Crude prices rose further on Monday as the geopolitical risk premium surrounding an expected Israeli response to last week’s Iranian rocket attack continued to grow.
- WTI Nov 24 is up by 3.9% at $77.3/bbl, while Brent broke above $80/bbl for the first time since August.
- Brent had its highest weekly gain since January 2023 last week because of the tensions.
- The rally in WTI futures undermines a recent bearish theme and suggests potential for a continuation higher near-term. Sights are on $77.40, the 76.4% retracement of the Jul 5 - Sep 10 bear leg, followed by $79.69, the Jul 18 high.
- Meanwhile, spot gold has fallen for a fourth successive session on Monday, with the yellow metal declining by 0.5% to $2,641/oz.
- Gold remains in consolidation mode, although the trend condition is also unchanged and bulls are still in the driver’s seat.
- The focus remains on $2,690.2 next, a Fibonacci projection. Firm support lies at $2,615.4, the 20-day EMA.
- Silver is underperforming and has fallen by 1.6% to $31.7/oz.
- The outlook for silver is still bullish, however, and a clear break of key resistance at $32.518, the May 20 high, would confirm a resumption of the medium-term uptrend and open $33.297, a Fibonacci projection.
- Firm support lies at $30.134, the 50-day EMA.
US OUTLOOK/OPINION: JPM - Housing-Related Inflation To Remain Relatively Sticky
Oct-07 18:34
- JPMorgan forecast core CPI at 0.29% M/M in September.
- “We still look for housing-related inflation to remain relatively sticky", eyeing OER cooling to 0.38% M/M and tenant's rents to 0.33% M/M. "That should keep these two closely watched measures running around 5% on an annual basis, which is still a good 1.5 to 2 percentage points above its pre-pandemic average pace.”
- “Industry data also point to a further modest increase in lodging prices, after a strong surge in August.”
- They also expect "fairly firm airfares" whilst "[t]ransportation demand appears to remain fairly firm against still-binding constraints on supply.”
- “Elsewhere in the CPI, we look for moderate rises in new and used vehicle prices in September, based on industry data (after seasonal adjustment), and for small 0.1% monthly declines in both apparel and communication equipment.”
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