The Week Ahead: September 5-11, 2016

Posted on 03/09/2017 10:26 AM


Stop-gap spending measure | Beige Book | Energy conference

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Lawmakers return from their extended break with a lot of items on the agenda, but little time or likely consensus to get much accomplished before they break again for November 8 elections.

A key remaining issue will be work on a continuing resolution (CR) to keep the government running after Sept. 30, as not a single one of the 12 spending measures has been sent to President Barack Obama’s desk for his signature. Senate Democratic Leader Harry Reid (D-Nev.) has already warned that his party will not support a stop-gap spending measure that goes into 2017. The last time there was no need to pass a stopgap spending measure known as a continuing resolution was 20 years ago, in the Fiscal 1997 budget cycle, according to the Congressional Research Service.

A familiar political party spending fracas is the primary hurdle in seeking a budget solution. Republican conservatives have waged a battle to reduce spending by $30 billion, or less than 1 percent of the federal government’s $4 trillion-plus annual budget. Democrats and moderate Republicans stress such a cut not be made because it would violate a bipartisan budget agreement reached last year and force unwelcome reductions to many programs, including in the military. Veteran congressional sources predict Republican leaders will do whatever is required to avoid a government shutdown, if only because the election-year stakes are so high.

The House has hearings on a host of topics, including on Iran, remote sensing, challenges facing small businesses in rural America and rural communications issues.

The House-Senate conference committee on the two versions of energy legislation holds its first meeting. In May, the House passed its version of the bill (HR 8) on a vote of 241-178, mainly along party lines. That package included several measures the White House had threatened to veto when they were previously considered as separate bills. Those included provisions from a California drought bill that would increase access to certain water sources by easing some endangered species protections and proposals to accelerate environmental reviews of logging and natural gas pipeline permitting on federal lands. Senate Democrats objected to the House approach and stressed it was a “veto-heavy” package. But after negotiations, Senate Democrats said they had received adequate assurances that Republicans were willing to advance something President Obama would actually sign, and the Senate voted 84-3 to go to conference before the chamber recessed for the summer. Staff has been meeting throughout the summer recess to reach initial details ahead of lawmakers’ returning this month.

There is a light list of major economic reports during the holiday-shortened week, but there are still some key updates. Tuesday releases include the PMI services and ISM non-manufacturing updates and the Labor Market Conditions Index. The week's data releases wrap up on Thursday with the weekly jobless claims and Consumer Credit. Otherwise, the focus will remain on prospects for the Fed to increase short-term interest rates, something that still is expected but not until later in the year. Market watchers will also await the European Central Bank's policy meeting to see whether they act to deploy any additional stimulus to help the Eurozone economy. Economic updates out of China always have potential to impact financial markets, especially in the wake of the G20 meeting in China.

Big attention point for Fed watchers will be the Beige Book report, the anecdotal recap on U.S. economic conditions in the 12 Federal Reserve district banks. The recap will provide a snapshot shot for Fed officials and it arrives two weeks in front of the next Federal Open Market Committee (FOMC) meeting. How that report characterizes employment, inflation and other aspects of the U.S. economy will start to frame the conditions for the Fed as they undertake their decision on interest rates. There are also several Fed speakers on tap, with San Francisco Fed's Williams on the schedule Tuesday. How he frames the August jobs data relative Fed policy could be notable even though he is not a voter on the FOMC until 2018. But there is a 2016 voter on the schedule Friday with Boston Fed's Rosengren to make remarks. Key for either will be to see if they offer any indications on when they back a rate increase.

The holiday-shortened week alters some USDA data releases, with weekly Grain Inspection and Crop Progress updates on Tuesday. The latter will be watched not only for the lofty condition ratings for corn and soybeans but also on how much of the cotton crop could have been vulnerable from hefty rains expected from tropical storm Hermine. The Weekly Export Sales report will arrive on Friday and the focus will be on how much of the huge sales of US corn and soybeans that were sold initially for delivery in the 2015/16 marketing year that ended August 31 did not get shipped out by month-end. It will be a much larger figure than normal given that those outstanding sales for corn were more than 100 percent higher than year-ago and more than 200 percent higher for soybeans. Other updates on the week include Livestock and Meat Trade data on Tuesday, an update on food security in U.S. households arrives on Wednesday and USDA releases a barrage of data Friday via county cash rent figures.


NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.




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