For the week of February 16 to 19
Today in markets:
Oil is the focus this morning as Saudi Arabia and Russia, the world’s top two largest crude producers, agreed this morning to freeze oil output at January production levels. This is the first significant co operation between an OPEC and non-OPEC producer in approximately 15 years and perhaps signals $30/bbl is the world’s floor on the price of oil. It is important to note that no fundamental change in oil markets has occurred as production cuts have not taken place. This is simply an attempt to stabilize oil prices. Iran was left out of the conversation and is unlikely to follow suit as the sanctions against the countries production were lifted in January. Oil traded has high as $31.53 during conversations but has since fell to slightly below $30/bbl, hovering currently at $29.40 The Canadian dollar reacted to this news, strengthening to 1.3707 against its USD counterpart but has returned to above 1.38 USDCAD as investors realize the co-operation has not significantly changed markets and that more must be done to prop-up a severely over supplied market place. Today’s expected range is 1.3780-1.3880 USDCAD.
Scheduled economic releases out of Canada today include manufacturing sales which significantly beat expectations for the month of December. Surveyed respondents expected a 0.5% advance for the month however the actual rate of increase was 1.2%, mirroring November’s revised increase. Scotiabank’s Global Economic team points out that “it will take more than a solid December for manufacturing sales to post a decent quarter”; we’ll have to wait and see if this beat was enough. Existing home sales for January and the Bloomberg Nanos Confidence survey for the week of Feb 12 will also be released.
Out of the U.S. the Empire State Manufacturing survey of general business conditions in New York for February released down -16.64 signally expectations sentiment has declined more than expected but has slightly increased from January’s reading of -19.37. US Treasury International Capital net monthly flows for December will also be released later today as well as mortgage delinquencies for the 4th quarter of 2015.
For the week ahead:
Economic releases are slim for Wednesday and Thursday with only International Securities Transactions and Wholesale Trade Sales for December scheduled. On Friday, both Retail Sales for December and CPI for January will be released. Surveyed expectations expect inflation to track 1.8% on a year-over-year basis and core inflation to track 1.9%.
On Wednesday housing starts for the month of January will be released, expected at 1170K (a 1.8% increase) after a 2.5% decline in December. Building permits are also expected, down -0.3% after a -6.1% drop in December. Producer prices for January are expected to have fallen 0.2% MoM and -0.6% YoY. Excluding food and energy, the prices are expected to have increased 0.1% on a monthly basis and 0.4% year over year. Industrial production for January is expected at 0.3% after declining 0.4% in December. The Fed will also release its January 26-27 FOMC meeting minutes. On Thursday, Initial and Continuing jobless claims will be released as well as the Leading Index for January.
Finally on Friday, CPI will be released with expected to have traced 1.3% on a year-over-year basis and Core CPI at 2.1%. For the month of January, consumer prices are expected to have declined another 0.1% but increased 0.2% excluding food and energy.
Posted by Concentra Financial Markets