US: Fed, housing data, personal income, and spending - NBF

Next week in the US, the main economic event is the Federal Reserve meeting. A rate hike is expected. According to analysts at the National Bank of Canada, the tone of the statement should be noticeably more dovish.

Key Quotes:

“In the U.S., the FOMC will announce its rate decision on Wednesday. In recent weeks we have heard a range of views from FOMC participants about the proper pace of monetary policy normalization. Some expressed doubts that a rate hike this time would be appropriate, while others argued that the economy is rolling with “a lot of momentum”. Despite those disagreements, we think that members will end up voting for a rate hike. After all, job creation remains, on average, above what is needed to keep the unemployment rate steady and the ISM manufacturing index is showing strong expansion. That said, the tone of the statement should be noticeably more dovish; we suspect that the reference to “further gradual increases” will be removed.”

“We’ll also get housing data for November, with marginal increases expected for housing starts, building permits and existing home sales. Also, if the jump observed in civilian plane orders is any guide, durable goods orders may have bounced back in November.”

“Still in November, both personal income and personal spending likely rose, buoyed by decent wage growth. The annual core PCE deflator, meanwhile, may have gained one tick to 1.9%. The first clues on the state of the manufacturing sector in December will also be available with the publication of the Empire State and Philly Fed manufacturing surveys.”