Wednesday, November 20, 2013

Thursday: Unemployment Claims, PPI, Philly Fed Mfg Survey

by Bill McBride on 11/20/2013 08:10:00 PM

No big surprises in the FOMC minutes. From the WSJ: Bond Buying Likely to Be Pared 'in Coming Months,' but Conveying Thinking on Low Rates Proves Vexing

Federal Reserve officials still expect to start pulling back on the central bank's $85 billion-a-month bond-buying program "in coming months," but they are looking for ways to stress that they will keep short-term interest rates low for a long time after it ends.
...
Officials discussed the possibility of linking any changes to the forward guidance to cuts to the bond-buying program. The changes in the guidance could be made "either to improve clarity or to add to policy accommodation, perhaps in conjunction with a reduction in the pace of asset purchases as part of a rebalancing of the Committee's tools," the minutes said

Fed officials also contemplated reassuring market participants that short-term interest rates are likely to stay near zero long after the 6.5% threshold is crossed, a message Fed Chairman Ben Bernanke delivered in a speech Tuesday night. They also discussed adding language to their policy statement indicating that even after the first increase in their benchmark short-term rate, they "anticipated keeping the rate below its longer-run equilibrium value for some time, as economic headwinds were likely to diminish only slowly."
The short version: the Fed will start to "taper" soon, but the Fed Funds rate will be low for a long long time.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 335 thousand from 339 thousand last week.

• Also at 8:30 AM, the Producer Price Index for October. The consensus is for a 0.2% decrease in producer prices (0.1% increase in core).

• At 10:00 AM, the Philly Fed manufacturing survey for November. The consensus is for a reading of 15.5, down from 19.8 last month (above zero indicates expansion).