Deputy-level U.S./China Trade Talks This Week

Posted on 09/15/2019 12:07 PM

FOMC | Farm program, disaster aid hearing | FY 2020 funding | Dairy signup deadline

U.S., China working-level trade teams meet this week, while the House of Representatives takes up a major spending bill that may not replenish funding for the Commodity Credit Corporation (CCC). On the financial front, the Federal Reserve on Wednesday is widely expected to announce a quarter-point cut in rates while the Fed will also hold a presser and unveil updated Fed forecasts.

 

The House convenes Tuesday while the Senate convenes Monday afternoon.

Key congressional topic is a needed spending bill for fiscal year 2020, which begins Oct. 1. Congress is expected to pass a short-term stopgap spending measure, likely into November. The House Rules Committee will meet late Tuesday afternoon to ready for floor consideration a stopgap spending measure, the final text of which has yet to be made public.

But contentious issues include a House Democratic effort to halt replenishing the Commodity Credit Corporation (CCC), but farm-state lawmakers from both parties and both chambers note any such move makes no sense relative to already committed payments under the Market Facilitation Program and other farm programs (link for details). “We cannot cut a lifeline to struggling farmers. I will not support a CR that doesn’t include tariff aid,” Rep. Cindy Axne (D-Iowa) tweeted on Friday. House Republican Leader Kevin McCarthy (R-Calif.) in a tweet Thursday said that Democrats are trying to “squeeze” American farmers by blocking this aid. “Farming is hard enough work as it is. But now Democrats are trying to squeeze American farmers even more by blocking a program that helps them withstand China’s unfair trade policies,” said McCarthy. “We’ve got to start putting America first!” Link to Congressional Research Service backgrounder on the CCC.

Another spending agreement hurdle is Trump's continued moves to fund a border wall. Lawmakers from both parties are in a bind following the president's move to postpone or cancel military projects in their states as a way to fund a border wall. Lawmakers are feeling the pressure to restore the military money.

China and U.S. working-level trade teams will meet in Washington as the Trump administration considers offering a limited trade agreement that would delay and even roll back some U.S. tariffs for the first time in exchange for Chinese commitments on intellectual property and agricultural purchases. Check Pro Farmer Policy Updates each morning for updates on this topic.

President Trump has said he will name his replacement for national security adviser this week after dismissing John Bolton last week. Trump said he has five potential candidates to replace Bolton but didn’t disclose any names.

Economic updates for the week include:

Monday:
— Federal Reserve Bank of New York releases its Empire State Manufacturing Survey for September. Economists forecast a 3.5 reading, roughly even with the previous two months’ data.
— Japanese markets are closed in observance of Respect for the Aged Day.

Tuesday:
— National Association of Home Builders releases its NAHB/Wells Fargo Housing Market Index for September. Consensus estimates are for a 66 reading, even with August. The survey suggests home builders are still bullish about the single-family housing market for the next six months.
— Industrial Production: Manufacturing production is likely to have increased 0.2% in August, after falling 0.4% in July. Separately, capacity utilization is likely to have risen 77.6% in August, after posting a gain of 77.5% in July.
— Treasury International Capital
— Stats Canada is expected to report factory sales decreased 0.3% in July, following a fall of 1.2% in the month before.

Wednesday:
— Federal Reserve: A quarter-point rate reduction is widely expected and would be the central bank's second such cut after lowering rates in July for the first time since 2008. Fed will also hold a presser and release updated Fed forecasts.
— Census Bureau reports residential-construction data for August. Expectations are for a seasonally adjusted annual rate of 1.25 million housing starts, up from July’s 1.19 million. Building permits are seen coming in at 1.3 million, about even with July’s data.
— Statistics Canada is expected to report annual inflation rate to hold steady in August at 2.0%. Consumer price index for August is likely to fall 0.1%, following a rise of 0.5% in July.
— Brazil's central bank is scheduled to release its benchmark interest rate. The central bank cut its interest rate to a new low of 6% in July.

Thursday:
— Conference Board releases its Leading Economic Index for August. Economists forecast a 0.1% rise, after a 0.5% jump in July.
— National Association of Realtors reports existing-home sales for August. Consensus estimates are for a seasonally adjusted annual rate of 5.4 million, even with July’s figure.
— Jobless Claims: The Labor Department is expected to show initial jobless claims for the week ended Sept. 14 rose to 212,000 from 204,000 in the week before.
— Philadelphia Fed Business Outlook Survey for August is likely to show a reading of 11.0 on Thursday, after showing a reading of 16.8 in July.
— Current Account: The Commerce Department is expected to report current account deficit in the second quarter shrank to $127.5 billion from $130.4 billion in the first quarter.
— Bank of England and Bank of Japan announce their monetary-policy decisions. Both central banks are expected to keep their key short-term interest rates unchanged at 0.75% and negative 0.1%, respectively. Governor Haruhiko Kuroda is expected to speak to reporters at the end of the central bank meeting.
— Argentina's statistics agency is expected to report gross domestic product for the second quarter. The country's economy shrank 5.80% in the previous quarter.

Friday:
— Federal Reserve releases its Financial Accounts of the United States for the second quarter. In the first quarter, household net worth jumped 4.5%, to $108.6 trillion, the largest quarterly gain since 2004. Net worth is unlikely to rise as much in the second quarter. The S&P 500 returned 4.3%, after a 13.6% gain in the March quarter.
— Canada's retail sales are expected to increase 0.6% in July, after reporting flat in June. Core retail sales are likely to rise 0.4% in July, following a surge of 0.9% in the month before.

Fed speakers on tap:

Friday:
— New York Federal Reserve Bank President John Williams delivers presentation on "Tying Down the Anchor: Monetary Policy Rules and the Lower Bound on Interest Rates" at the Swiss National Bank Research Conference on "New Normal Monetary Policy Frameworks" in Zurich, Switzerland. Event is closed to the press.
— Boston Federal Reserve Bank President Eric Rosengren to speak at a conference on credit markets at New York University's Stern School of Business in New York, N.Y.

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

Monday, Sept. 16

Ag reports and events:

  • Export Inspections
  • Crop Progress
  • Fruit and Tree Nut Data
  • Vegetables and Pulses Data
  • Cotton & Wool Outlook
  • Oil Crops Outlook
  • Feed Outlook
  • Rice Outlook
  • Wheat Outlook
  • Turkey Hatchery
  • Holiday: Japan, Malaysia
  • EU weekly grain, oilseed import and export data
  • Monthly update from European Commission on weather/crop conditions
  • Malaysia’s Sept. 1-15 palm oil export data by AmSpec

Energy reports and events:

  • North Dakota monthly oil report
  • EIA’s Monthly Drilling Productivity Report, including projection of October oil production in U.S. shale regions

Tuesday, Sept. 17

Ag reports and events:

  • Feed Grains: Yearbook Tables
  • Season Average Price Forecast
  • Livestock Historical Track Records
  • Japan milling wheat tender
  • Malaysia’s Sept. 1-15 palm exports numbers by SGS
  • Abares agricultural commodities report

Energy reports and events:

  • API weekly U.S. oil inventory report

Wednesday, Sept. 18

Ag reports and events:

  • Broiler Hatchery
  • Milk Production
  • Livestock, Dairy, and Poultry Outlook
  • Sugar Outlook
  • Hop Stocks

Energy reports and events:

  • EIA weekly U.S. oil inventory report
  • U.S. weekly ethanol inventories

Thursday, Sept. 19

Ag reports and events:

  • Weekly Export Sales
  • Livestock Slaughter
  • Port of Rouen data on French grain exports
  • Palm Oil Economic Colloquium, Kuala Lumpur
  • Japan milling wheat tender result

Energy reports and events:

  • EIA natural gas storage change

Friday, Sept. 20s

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • Cattle on Feed
  • Stone Fruit: World Markets and Trade
  • Russia’s Agroinvestor magazine holds annual conference on Russian crop production
  • FranceAgriMer weekly crop conditions
  • AmSpec, Intertek to release Malaysia’s Sept 1-20 palm oil export data; SGS palm shipment figures

Energy reports and events:

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

Other reports and events this week include:

Monday, Sept. 16

  • President Trump hosts Bahrain’s Crown Prince Salman bin Hamad Al-Khalifa at the White House
  • Wind industry. House Natural Resources’ panel field hearing on N.J.’s offshore wind industry.
  • CFTC considers final rules on revisions to the Volcker Rule and on position limits for security futures products.
  • United Fresh Produce Association conference, through Wednesday, in Washington, D.C.

Tuesday, Sept. 17

  • 74th United Nations General Assembly convenes in New York, with general debate to begin Sept. 24.
  • World Bank Group President David Malpass gives first speech in his new role; Peterson Institute Conference Center.
  • FY 2020 appropriations. Senate Ag Appropriations Subcommittee marp of USDA, Rural Development, FDA and Related Agencies.
  • Clean energy. Senate Energy Committee hearing on minerals and clean energy.
  • Hong Kong. U.S. Congressional-Executive Commission on China holds a hearing on Hong Kong and future U.S.-Hong Kong relations in light of current unrest; Activist Joshua Wong is among those scheduled to give testimony.

Wednesday, Sept. 18

  • Federal Reserve is widely expected to lower U.S. interest rates in response to slowing global economic growth and muted inflation. Chair Jerome Powell holds a post-decision press conference and the Fed will released updated forecasts.
  • Low carbon. CEO Bob Dudley, former Energy Secreary Ernest Moniz speak at an CSIS-hosted forum on “low-carbon pathways.”
  • Clean Water Act changes. Dave Ross, assistant administrator for EPA’s Office of Water, testifies before a House Transportation and Infrastructure Committee panel on Clean Water Act policy changes.
  • Water infrastructure. Senate Environment and Public Works Committee hearing on improving American economic competitiveness via water resources infrastructure.
  • SEC holds open meeting to consider revisions to Volcker Rule.

Thursday, Sept. 19

  • Vice President Mike Pence speaks on U.S. economy at the Delivering Alpha conference in New York City.
  • EPA Administrator Andrew Wheeler appears before House Science Committee hearing on science and technology at the agency.
  • Implementation of farm and disaster programs. House Ag Committee joint General Farm Commodities and Risk Management Subcommittee and Livestock and Foreign Ag Subcommittee hearing.
  • Sinkhole mapping. House Natural Resources Energy and Mineral Resources Subcommittee hearing on the Sinkhole Mapping Act and other bills.
  • SEC Chairman Jay Clayton speaks at panel discussion at the Delivering Alpha conference in NYC.
  • SEC Investor Advisory Committee meeting on investor disclosures and increased leverage; participants include Andrew O’Brien, JPMorgan head of global loan capital strategy.
  • Nomination hearing. Senate Health, Education, Labor and Pensions Committee hearing on nomination of Eugene Scalia as Secretary of Labor.

Friday, Sept. 20

  • President Trump hosts Australian Prime Minister Scott Morrison at the White House for meetings and a state dinner. It is Trump’s second state dinner; his first was for French President Emmanuel Macron.
  • Deadline for farmers to sign up for the Dairy Margin Coverage program. USDA has not yet said the deadline will be extended. As of last week, 19,132 operations have signed up, 51% of the total dairy operations in the country and 71% of the farms previously establishing their production history with the Farm Service Agency.

 

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