U.S. Investors Gear Up for Active Week in the Financial Markets

A deluge of market-moving events will make their way through the financial markets this week, giving U.S. investors a chance to reflect on the health of the domestic economy. President Donald Trump is also scheduled to deliver a speech that will be closely monitored for clues about the new administration’s economic policies.

The data dump begins on Monday with a report on January U.S. durable goods orders, a gauge of manufacturing activity that is also associated with economic growth. Orders for manufactured goods meant to last three years or more are forecast to have risen 1.9% in January, following a 0.5% drop the previous month.

Later in the day, the Federal Reserve Bank of Dallas will release its monthly report on manufacturing.

On Tuesday, the Commerce Department will release revised fourth quarter GDP figures that are expected to show a slightly faster pace of expansion. Last month, Commerce economists said GDP expanded just 1.9% annually in October-December. The revised reading is expected to show growth of 2.1%.

Other reports scheduled for Tuesday include the Conference Board’s consumer confidence index and the S&P/Case-Shiller Home Price Indices.

President Trump will address a joint session of Congress Tuesday evening that investors hope will provide a blueprint of the administration’s tax policies. Trump spurred another record-setting rally on Wall Street earlier this month by announcing that “big league” tax cuts are on the way. The president has also announced plans to begin loosening regulations on the financial markets and renegotiate existing trade deals.

The economic calendar heats up on Wednesday with data on personal income and outlays. U.S. personal income from all sources is forecast to rise 0.3% in January. Personal spending is expected to rise by a similar amount.

Separately, the Institute for Supply Management (ISM) will release its closely watched manufacturing purchasing managers’ index (PMI). Although the February PMI is expected to weaken slightly, the underlying trend will likely point to sustained growth in the sector.

Oil traders on Wednesday will also be monitoring the U.S. Energy Information Administration’s weekly inventory report.

The Labor Department’s weekly report on initial jobless claims will make its way through the financial markets on Thursday. Claims have been below 300,000 – a threshold commonly associated with a stronger labor market – for 103 consecutive weeks. The four-week average for claims, which weeds out volatility, recently fell to tis lowest level since 1973.[1]

ISM will round out the week with its official gauge of services activity. The non-manufacturing PMI is expected to give a similar reading for February as it did the previous month. Meanwhile, oilfield services provider Baker Hughes Inc. will release its weekly rig-count data in the final session of the week. Last Friday, the company said the active rig count rose for the sixth straight week, a sign U.S. shale producers were ramping up capacity.[2]

Federal Reserve Chair Janet Yellen and Vice Chair Stanley Fischer will also deliver speeches on Friday that will be closely monitored by the markets. The minutes of the Fed’s latest meetings, which were released February 22, signaled that interest rates will rise soon. Encouraged by faster inflation and a stronger jobs recovery, the U.S. central bank is expected to raise rates on three occasions this year. Its next policy meeting is scheduled March 14-15.

[1] Reuters (February 23, 2017). “U.S. jobless claims up, four-week average lowest since 1973.” CNBC.

[2] Akin Oyedele (February 24, 2017). “Baker Hughes oil rig count rises for 6th straight week.” Business Insider.

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