- The Fed is unlikely to announce any decisions on balance sheet run-off today;
- Rates still have to rise, with March the most likely date for lift-off, but the Fed can afford to wait for QT.
- Upside risk for December new home sales, after a run of undershoots compared to mortgage applications.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Consumers are under short-term pressure from all sides, but the turn in spending will likely come soon.
- Payrolls will be a bit slower to respond to falling Covid cases than the real-time activity data...
- ...The January and February reports will both be scarred by Omicron, even as inflation rises further.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The enthusiasm among some FOMC members for a rapid balance sheet runoff is misplaced.
- If the FOMC wants to tighten more aggressively, faster rate hikes are less risky and send a clearer signal.
- We think the runoff will begin in the fall, slowly; market conditions will not allow the Fed to move quickly.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The housing story in the second half of last year, with demand rising, and inventory low, is about to change.
- Higher mortgage rates will reduce the number of potential buyers, and sellers will have less power.
- The surge in jobless claims last week likely reflects the Omicron hit; it will be short, but just how short?
Ian Shepherdson (Chief Economist and Founder)U.S.
- The preliminary Homebase data for December signal falling payrolls, even allowing for upward revisions.
- The Philly Fed index likely will follow the plunge in the Empire State, hit by the Omicron wave.
- Jobless claims likely rose for a third straight week, thanks to the seasonals, which will soon reverse.
Ian Shepherdson (Chief Economist and Founder)U.S.
- December's grim retail sales report likely will be fol- lowed by further weakness in January...
- Spending has been hit, temporarily, by a one-two punch from early holiday shopping, then Omicron.
- The Fed is dead set on starting to tighten soon, but the upcoming data should dampen Q2 expectations.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The Omicron hit likely will be visible in the retail sales data, but the core goods numbers should be OK.
- Industrial production probably was depressed by very warm December weather; expect a quick rebound.
- Car prices are beginning to moderate in the PPI, both at the manufacturer and dealer margin levels.
Ian Shepherdson (Chief Economist and Founder)U.S.
- CPI inflation will peak in the next few months, but the speed of the coming downshift is unclear.
- China's PPI inflation is now falling and has further to go; the U.S. will follow soon.
- Seasonal adjustment issues likely pushed jobless claims up again last week, but the trend is falling.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Upside risk to the December core CPI, mostly from vehicle prices, airline fares, and hotel room rates.
- Headline inflation likely rose above 7%, but this should be the peak.
- Small firms sentiment is yet to reflect the Omicron hit, or the weakening in the stock market.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Covid cases look to be peaking, but ICU occupancy looks set for new pandemic highs.
- The situation will look much better a month from now, as cases drop and Paxlovid cuts hospitalizations.
- As Covid finally recedes, people will start to spend their accumulated savings.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The risk to December payrolls is decidedly to the up- side; we look for 850K, against the 444K consensus.
- A further rise in participation would be hugely significant, signalling an easing of excess labor demand.
- The ISM services survey suggests that supply-chain pressures are easing, but they remain intense.
Ian Shepherdson (Chief Economist and Founder)U.S.
- The Homebase small business jobs data point to December payrolls rising by 1M-plus...
- ADP's numbers today likely will be far short of this pace, but we see upside risk to the consensus.
- Supply chain pressures continue to ease; expect the key ISM readings to be at normal levels by the spring.
Ian Shepherdson (Chief Economist and Founder)U.S.
- Covid cases still rocketing, but they likely will peak over the next couple weeks.
- The economic hit will be smaller and briefer than during the Delta wave, but it will be visible nonetheless.
- The December ISM survey likely will show that supply-chain pressures are easing, gradually
Ian Shepherdson (Chief Economist and Founder)U.S.
In one line: Confidence gain likely won’t last; home prices still rocketing
Ian Shepherdson (Chief Economist and Founder)U.S.
- Core PCE probably hit a 32-year high in November, but it has further to rise before peaking in February.
- Core capital goods orders are rising, but higher inflation is eating into the gains in real terms.
- Upside risk for November new home sales, given the sustained surge in mortgage applications.
Ian Shepherdson (Chief Economist and Founder)U.S.
- U.S. Covid cases are rocketing, but we are hopeful that pressure on hospitals will be contained.
- Omicron seems to hospitalize fewer people, and for much less time, than Delta.
- Existing home sales and prices probably jumped again in November; inventory still very tight.
Ian Shepherdson (Chief Economist and Founder)U.S.
The U.K.'s exponential leap in Covid cases and plunge in services activity is coming to the U.S., soon.
We hope the Omicron wave will be brief, but it is cer- tain to be severe, at least in terms of cases.
The robust industrial recovery continues, with every chance of further increases in output in Q1.
Ian Shepherdson (Chief Economist and Founder)U.S.
The Fed's tapering and rate hike plans assume only a modest hit from Omicron; we hope they're right.
Chair Powell emphasised the threat from rapid wage gains; all eyes on labor participation, and the Q4 ECI.
The abrupt slowing in core retail sales in November is no big deal; a correction was due after rapid gains.
Ian Shepherdson (Chief Economist and Founder)U.S.
The Fed will announce faster tapering today, opening the door to a rate hike in the spring.
The dotplot likely will show two rate hikes in 2022, triggered by the run of upside inflation surprises.
Core retail sales likely undershot consensus in November, but the trend is still strong.
Ian Shepherdson (Chief Economist and Founder)U.S.
Core PPI inflation has further to rise, but it should start to fall in January.
The details of the NFIB survey are more important than the headline index...
...Look out for strength in capex plans, and a modest rise in selling prices, lifted by gas prices.
Ian Shepherdson (Chief Economist and Founder)U.S.
