The Week Ahead: June 5-11, 2017

Posted on 06/05/2017 6:29 AM

Comey at hearing | White House and infrastructure | Budget hearings | U.S.-Mexico sugar | Food aid

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

Lawmakers return from the Memorial Day break with heavy attention on the coming testimony of former FBI Director James Comey, while infrastructure is the White House focus.

President Trump plans to unveil more of the administration's plans relative to infrastructure spending. The initial focus will be on the administration's plan to shift the air traffic control system out of the Federal Aviation Administration (FAA) and potentially on how the administration plans to utilize government funds toward the infrastructure initiative. He will travel later this week to Ohio and Kentucky to speak on rural. He will visit Dept. of Transportation headquarters on Friday to talk about the federal permitting process.  National Economic Council Director Gary Cohn noted in a briefing on Friday that inland waterways rely heavily on federal money for maintenance.

Several hearings are on tap on the Fiscal 2018 budget request from the administration for several government agencies. Sessions examining infrastructure relative to the Coast Guard and Federal Aviation Administration are on tap. Nomination hearings for subcabinet positions at the Nuclear Regulatory Commission, Health and Human Services and Office of Management and Budget will take place. Issues relating to the next farm bill are also to be looked at relative to international food aid and the Supplemental Nutrition Assistance Program (SNAP).

Former FBI director is biggest draw. The biggest attention on the Hill and in financial markets will be the testimony before the Senate Intelligence Committee by former FBI Director James Comey. His firing and subsequent revelations prompted increased worry in financial markets so they will tune in to see if there are any new shocking developments that raise further questions about the ability of the administration to move forward on their economic and policy objectives.

Trade policy is another focus, as a U.S.-Mexico accord could be announced today, the deadline for current trade talks, Mexican Sugar Chamber President Juan Cortina told several media outlets. Today is the deadline that Commerce Secretary Wilbur Ross set for a new sugar trade suspension deal. Any deal would hold back antidumping and countervailing duties in exchange for restrictions on what Mexican producers can export to this country. Recent talks have been limited to government officials, with regular talks between Ross and Mexican Economy Secretary Ildefonso Guajardo Villarreal. Mexican sugar producers have been pressuring their government to put in place steep retaliatory duties on imports of U.S. corn syrup —  representatives from Coca-Cola, Archer Daniels Midland and Cargill met with White House official Ray Starling last month, warning against potential fallout if the U.S. and Mexico cannot agree to a new trade pact and avert large duties on American sugar imports from Mexico. Guajardo late last week said the positions between the two countries have moved closer and he is expected in Washington today.

USDA Secretary Sonny Perdue travels to Canada for his first foreign trip as USDA Secretary. He will be in Toronto, Canada today and will meet with Canadian Minister of Agriculture and Agri-Food Lawrence MacAulay and other Canadian officials to discuss priority agricultural issues regarding Canada and the United States.

The economic calendar is light as we move into the first full week of June. The biggest day in the schedule is today when data on Productivity & Costs, PMI Services Index, Factory Orders, ISM Nonmanufacturing Index and the Labor Market Conditions Index are all scheduled to be released. Wednesday will see the monthly Consumer Credit report arrive, followed by the Weekly Jobless Claims figures on Thursday while the week wraps up with the Wholesale Trade report Friday. Traders will continue to assess the releases relative to how they could affect the prospects for Fed moves, but the odds for a June increase remain very high even with questions now emerging on moves into the fall.

Traders will have a "Fed-free" week as the pre-Federal Open Market Committee (FOMC) blackout period now sets in two Saturdays before the next Fed meeting which will take place June 13-14. While there could be remarks from Fed officials to media outlets and such, they cannot wade into the issues of monetary policy and the U.S. economic situation. But the attention on the Fed now remains on the actions on the balance sheet and the prospects for interest rate adjustments after June.

Today's condition updates for corn remain key as traders are wanting to see if those ratings improved after the first one of the season coming in below expectations. That and weather will continue to be the focus for traders relative to the 2017 corn and wheat crops. The usual releases on the export side return to their normal release days – Grain Inspections today and Weekly Export Sales on Thursday. So, the big attention then falls on Friday when USDA will release the Crop Production and Supply/Demand report. The second update of the US winter wheat crop based on surveys will come that day while attention on the Supply/Demand data will be on demand shifts and how the updated winter wheat crop estimate figures into the wheat balance sheet.



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


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