US: Chicago PMI, Pending home sales and Fed Beige Book in focus - Nomura

Research Team at Nomura, suggests that the investors will be keenly eyeing the release of Chicago PMI, Pending home sales and Fed Beige Book in today’s US session.

Key Quotes

“Chicago PMI: The headline index fell to 50.6 in October from 54.2 in September, implying business activity growth expanded by less than the previous month. The persisting impact of the strong dollar and tepid capital spending in prior months likely contributed to the slower pace of activity at manufacturers in the region. Other regional manufacturing surveys in November suggest conditions improved over the month. The Empire State manufacturing survey rebounded to positive territory and the details of the Philly Fed survey implied further improvement in manufacturing activity. Based on these regional surveys, we forecast that the Chicago PMI improved to 53.0 in November from 50.6 in October (Consensus: 52.5).”

“Pending home sales: Pending home sales, which tend to lead existing home sales by couple of months, advanced 1.5% in September. This reading is consistent with the pickup seen in existing home sales in October. Healthy labor market conditions and historically low mortgage rates suggest that current demand may continue in coming months, although the supply of for-sale homes remains limited, which may dampen the prospects of better home sales. Consensus is expecting pending home sales to have improved only slightly in October by 0.1% m-o-m.”

“Fed Beige Book: We expect the Fed Beige Book prepared for the 13-14 December FOMC meeting to show that the economy expanded at a modest to moderate pace since the last update in October. Incoming data have been somewhat positive, as the better momentum from the prior month persisted. Payroll gains remained steady and inflation progressed further toward the Committee’s 2% target in October. In the previous Beige Book, the outlook was generally positive. Some Fed districts reported tightening labor market conditions with modest wage and employment growth, but most districts reported slow price growth with flat input and/or output prices. Also, some contacts quoted the Presidential Election as a source of near-term uncertainty. In the upcoming Beige Book, we will look for any change in the outlook post-election in addition to any additional color on the slack in the labor market and inflationary pressure in the districts.”