House and Senate on Recess Until Sept. 9; Fallout Continues on Trump Trade Move

Posted on 08/04/2019 7:59 AM

President Trump signs budget/deficit suspension measure, but hard work ahead

The House and Senate are on recess until Sept. 9, but as usual, some work continues beyond the chamber floors. Trade policy, especially the no-progress talks in Shanghai between U.S. and Chinese officials, will continue to be a topic of interest. Updates on the U.S./China trade war front are in Pro Farmer's Policy Updates.
     Commodity markets are in an anxious mode, both because of threatened new tariffs on China, and on anxiety ahead of USDA's Aug. 12 supply and demand updates.
     Washington lawmakers, Trump administration officials and others will also focus on two mass shootings in less than 24 hours over the weekend. A gunman opened fire on Saturday in a crowded Walmart store in El Paso, a majority-Hispanic border city, killing at least 20 people, with dozens injured. And in Dayton, Ohio, at least nine people were killed and 26 were wounded in a shooting early Sunday in an entertainment district. A shooter had killed three and injured 13 at the Gilroy Garlic Festival, in Gilroy, Calif., the prior Sunday.


Washington will... or should be... relatively quiet, with Congress out on recess until Sept. 9. But President Donald Trump has frequently altered any expectation of a slowdown, as evidenced late last week with his latest tweets on China and his threat to implement new tariffs on $300 billion of Chinese products. This weekend saw further developments on this topic, along with additional Chinese commentary on the topic.

One of the major things Congress must do is a budget that determines spending levels and specifics. President Trump on Friday signed legislation extending the debt limit until after next year’s election (through July 31, 2021) and authorizing additional federal spending.

Discretionary funding has increased 21% since the Trump administration. We are likely going into multiple years of near or over $1 trillion in annual fiscal deficits, on top of the already $22 trillion debt.

Trump encouraged congressional Republicans to back the most recent budget deal, brokered by Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi (D-Calif.), tweeting last week that the agreement is “phenomenal for our Great Military, our Vets, and Jobs, Jobs, Jobs!” and adding “there is always plenty of time to CUT!” The “plenty of time to cut” line is a clear subject of potential discussion ahead as to what any second Trump administration term may mean to budget battles and program-cutting ahead.

The budget measure sets budget caps for two years that will allow $324 billion in additional domestic and defense funding above current spending cap levels.

Of note, Congress will still need to pass spending bills in September adhering to the new $1.3 trillion spending cap to avoid another federal shutdown when the next fiscal year begins Oct. 1. Because senators haven’t written any of its 12 spending bills, a short-term measure extending current funding is likely, for at least some government agencies — the so-called Continuing Resolution (CR).

Also, both parties have promised not to insist on any “poison pill” provisions in the spending bills, referring to added provisions that would be a deal-breaker for one party. This likely includes any effort to try to stop USDA from relocating the ERS and NIFA.

Economic updates for the week include:

— Institute for Supply Management releases its Non-manufacturing Index for July. Economists forecast a 55.5 reading, up from June’s 55.1.
— PMI Services Index
— Canada’s markets closed for Civic Holiday

— Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey (JOLTS) for June. Consensus estimates are for 7.3 million job openings on the last business day of June, roughly even with May’s data.
— Reserve Bank of Australia announces its monetary-policy decision. The market expects the central bank to keep its key short-term interest rate unchanged at 1%.

— Federal Reserve reports consumer credit data for June. Expectations are for an increase of $17 billion in total outstanding consumer credit at the end of June. If estimates are met, consumer debt would surpass $4.1 trillion, an all-time high.
— MBA Mortgage Applications

— Department of Labor reports initial jobless claims for the week ending on Aug. 3. The four-week average of jobless claims is 212,000.
— Wholesale Trade
— Fed Balance Sheet
— Money Supply

— BLS releases the July Producer Price Index. Economists forecast a 1.6% year-over-year rise, down from June’s 1.7%. The core PPI is expected to hit 2.3%, even with June’s data.

Fed speakers on tap:

— St. Louis Federal Reserve Bank President James Bullard speaks about the U.S. economy and monetary policy at the National Economists Club annual Summer Signature event held at the National Press Club in Washington, DC.

— Chicago Federal Reserve Bank President Charles Evans to speak at a media breakfast event in Chicago, Illinois.

Key USDA and international agriculture and energy-related reports and events on tap:

Monday, Aug. 5

Ag reports and events:

  • Export Inspections
  • Crop Progress
  • Livestock and Meat International Trade Data
  • Aquaculture Data
  • U.S. Agricultural Trade Data Update
  • Intertek data on Malaysia’s Aug. 1-5 palm oil exports
  • EU weekly grain, oilseed import and export data
  • Brazil Agribusiness Forum; Speakers include Cofco International chairman Johnny Chi and executives from Brazil’s agriculture sector
  • Holiday in Canada

Tuesday, Aug. 6

Ag reports and events:

  • U.S. Bioenergy Statistics
  • Cash Rents
  • Land Values
  • Purdue agriculture sentiment for July
  • France gives estimates for 2019 grain output and crop area

Energy reports and events:

  • API weekly U.S. oil inventory report
  • EIA Short Term Energy Outlook (STEO)

Wednesday, Aug. 7

Ag reports and events:

  • Broiler Hatchery

Energy reports and events:

  • U.S. weekly ethanol inventories
  • EIA Weekly Petroleum Status Report

Thursday, Aug. 8

Ag reports and events:

  • Weekly Export Sales
  • Buenos Aires Grain Exchange weekly crop report
  • Port of Rouen data on French grain exports
  • Brazil’s Conab report on 2018-19 grain crop

Energy reports and events:

  • EIA natural gas storage change

Friday, Aug. 9

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • FranceAgriMer weekly update on French crop conditions

Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts
  • IEA monthly report


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