US: The Macro Week Ahead: 2nd Q4 GDP and January PCE Reports
Feb-21 19:44
Next week's US economic calendar is backloaded, with the second release for Q4 national accounts on Thursday before the January PCE report on Friday.
- Additionally, regional/consumer surveys will receive more attention than usual given the deterioration seen in the February reports we've seen so far: the schedule includes regional Feds (services/nonmanuf includes Dallas Fed, Philly; manufacturing includes Dallas, Richmond, KC), Conference Board Consumer Confidence, and MNI Chicago PMI.
- GDP: Real GDP growth is seen confirming what was at the time a softer than expected 2.3% annualized in Q4, whilst there will also be a first estimate for real GDI growth after 2.1% in Q3. Much of the relative GDP weakness in Q4 after two quarters averaging 3.0% came from a large drag from inventories. It should continue to show signs of robust domestic demand after personal consumption increased 4.2% annualized in the advance release.
- PCE: However, January’s monthly report is likely to show consumption got off to a much weaker start of 2025. Recall that retail sales were far weaker than expected in January as they slid -0.9% M/M (cons -0.2) along with an even larger miss for the control group at -0.8% M/M (cons 0.3) to more than unwind the previously strong 0.8% M/M increase in December. Early days for the Bloomberg consensus currently see real personal spending growth of -0.1% M/M in Jan after 0.4% in Dec.
- As for inflation, Governor Waller cited estimates for core PCE inflation of around 0.25% M/M and it likely rounding to 2.6% Y/Y with some help from modest upward revisions. Base effects will have helped it drop from the 2.8% Y/Y averaged in Q4 whilst recent run rates should look a little more favorable (2.1% and 2.4% annualized over three and six months assuming no revisions).
Note that revisions will go back to Q4, reflecting the new seasonal adjustment factors for both CPI and PPI, but longer dated revisions will have to wait for the comprehensive national account revisions due in September.
| Date | ET | Impact | Period | Release | |
| 24/02/2025 | 1030 | ** | Feb | Dallas Fed manufacturing index | |
| 25/02/2025 | 0830 | ** | Feb | Philadelphia Fed Nonmfg Index | |
| 25/02/2025 | 0855 | ** | 22-Feb | Redbook Retail Sales | % |
| 25/02/2025 | 0900 | ** | Dec | Case-Shiller /FHFA Home Prices | |
| 25/02/2025 | 1000 | *** | Feb | Conference Board Confidence | |
| 25/02/2025 | 1000 | ** | Feb | Richmond Fed Mfg Index | |
| 25/02/2025 | 1030 | ** | Feb | Dallas Fed services index | |
| 26/02/2025 | 1000 | *** | Jan | New Home Sales | (m) |
| 27/02/2025 | 0830 | *** | 22-Feb | Initial / Continuing Jobless Claims | (k) |
| 27/02/2025 | 0830 | ** | Jan | Durable Goods New Orders m/m | % |
| 27/02/2025 | 0830 | *** | Q4 | GDP annualized QQ | % |
| 27/02/2025 | 1000 | ** | Jan | NAR Pending Home Sales | |
| 27/02/2025 | 1100 | ** | Feb | Kansas City Fed Mfg Index | |
| 28/02/2025 | 0830 | *** | Jan | Core PCE Price Index | % |
| 28/02/2025 | 0830 | *** | Jan | Personal Income/Spending | % |
| 28/02/2025 | 0830 | ** | Jan | Advance Goods Trade Gap | USD (b) |
| 28/02/2025 | 0830 | ** | Jan | Advance Retail/Wholesale Inventories | % |
| 28/02/2025 | 0945 | *** | Feb | MNI Chicago PMI |
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US STOCKS: Late Equities Roundup: Holding Near Record Highs, Earnings Resume
Jan-22 19:37
- Stocks are drifting near midday highs late Wednesday semiconductor stocks helping SPX Eminis climb back near early December all-time highs (6178.75).
- Currently, the DJIA trades up 110.69 points (0.25%) at 44137.46, S&P E-Minis up 41.25 points (0.68%) at 6126, Nasdaq up 251.1 points (1.3%) at 20009.01.
- Information Technology and Communication Services sectors continued to outperform in the second half, chip stocks supporting the former as noted: Monolithic Power +8.53%, Nvidia +4.63%, Lam Research +3.66%, while Applied Materials gained 3.01%.
- Interactive media and entertainment stocks led gainers in the Communication Services sector: Netflix still up over 10% after some profit taking in the second half as subscriptions soar, Warner Bros +2.35%, Meta +1.77%.
- On the flipside, Utilities and Real Estate sectors continued to underperform in late trade, gas and multi-energy providers weighing on the former: Dominion Energy -4.54%, PG&E -3.01% while Edison International declined 3.63%.
- Investment trusts, particularly health care and industrial REITs weighed on the Real Estate sector: Ventas -2.95%, Healthpeak Properties -2.56% and Prologis -2.0%.
- Earnings expected to be announced after the close include: Steel Dynamics, Discover Financial Services, Hexcel Corp, Alcoa Corp, Knight-Swift Transportation and Kinder Morgan Inc.
US TSY OPTIONS: Large Low Delta 10Y Put Buy, Opener
Jan-22 19:36
- +50,000 TYH5 102 puts 1 ref 108-18. Total volume in the OTM put only 2,900 coming into the session.
FED: MNI Hawk-Dove Spectrum Shifts, Easing Bias Remains Overall (2/2)
Jan-22 19:23
We’ve updated our Hawk-Dove Spectrum for 2025, with the rotation of regional president voters bringing in Chicago Fed’s Goolsbee (dove), KC’s Schmid (hawk), St Louis’s Musalem (hawk), and Boston’s Collins (neutral/dove) for 2024. (Out are the neutral/hawkish Bostic and Barkin, hawk Hammack, and neutral/dovish Daly).
- All participants remain on the dovish side of the Hawk-Dove line in absolute terms, reflecting the Committee’s overall easing bias.
- However most of the Dots have been moved in a more hawkish direction in the last 6 weeks, in light of the more limited cuts seen in the December Dot Plot and the growing sentiment that the FOMC can remain patient in deciding when to cut next.
- We now regard Hammack as the FOMC’s biggest hawk, though only marginally over her colleagues Bowman, Schmid and Musalem.
- Conversely, Gov Waller has ensconced himself as one of the pre-eminent doves on the Committee, seeing potential for 3-4 cuts this year, and possibly restarting the easing cycle earlier than market pricing implies (though he spoke after the December CPI data).
