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Markets Update pm

Markets Data 11 Jan

GLOBAL EVENTS

U.S. retail sales climbed in December for a third month, data in the coming week probably will show, indicating that consumer spending is helping give the world’s biggest economy a boost.

Industrial production in the U.S. fell in December for a fourth month, a separate report may indicate. U.S. President Barack Obama delivers the State of the Union address as the final year of his second term gets under way.

The Gulf Cooperation Council holds an emergency meeting in Riyadh to discuss the diplomatic crisis involving Saudi Arabia and Iran.

The Bank of England will probably keep its key interest rate unchanged at 0.5 percent. Indonesia, Poland and South Korea also set monetary policy.

The Week Ahead:

MONDAY

Dennis P. Lockhart, president of the Atlanta Fed, will speak on the U.S. outlook and monetary policy. 12:40.

Dallas Fed President Robert S. Kaplanwill speak on economic conditions and monetary policy. 19:00.

Japan’s markets are closed for a national holiday.

ECONOMY: Mexico industrial production (Nov.), Spain industrial production (Nov.), Romania trade (Nov.), Czech unemployment (Dec.), Turkey current-account balance (Nov.).

CENTRAL BANKS: Israel minutes.

TUESDAY

U.S. President Barack Obama delivers the State of the Union address in Washington. The speech will be Obama’s last chance to tout his proposals in the final full year of his presidency. 09:00.

The Bank of France holds a monetary-policy conference, with speakers including European Central Bank Executive Board member Peter Praet, Bank of England Governor Mark Carney, Federal Reserve Vice Chairman Stanley Fischer and Bank of Japan GovernorHaruhiko Kuroda. From 09:00 CET in Paris (03:00 EST).

Richmond Fed President Jeffrey M.Lacker will speak on the U.S. economic

outlook. 15:15.

ECONOMY: U.S. NFIB small business optimism index (Dec.), U.S. job openingsand labor turnover (Nov.), Japan current account (Nov.), France business sentiment (Dec.), U.K. industrial production (Nov.), Czech CPI (Dec.), Czech GDP (third quarter), Czech retail sales (Nov.), Serbia CPI (Dec.), Russia CPI (Dec.), Belarus CPI (Dec.), South Africa manufacturing production (Nov.).

WEDNESDAY

The president of the Boston Fed, Eric S. Rosengren, will be the featured speaker at the Greater Boston Chamber’s Government Affairs Forum. 07:45.

Chicago Fed President Charles L. Evans speaks on the economic outlook and monetary policy at the Corridor Economic Forecast Luncheon in Cedar Rapids, Iowa. 11:30 (12:30 EST).

ECONOMY: U.S. MBA mortgage applications (weekly), U.S. budget statement (Dec.), Federal Reserve Beige Book, Brazil retail sales (Nov.), China trade balance (Dec.), South Korea unemployment (Dec.), South Korea household borrowing (Dec.), South Korea money supply (Nov.), Portugal CPI(Dec.), euro-area industrial production (Nov.), Romania industrial output (Nov.), Romania CPI (Dec.), Poland trade(Nov.), Russia weekly CPI.

THURSDAY

U.K. rate decision. The Bank of England will keep its key interest rate unchanged at 0.5 percent and its asset-purchase target at 375 billion pounds ($547 billion) as uncertainty surrounding the U.K.’s possible exit from the European Union threatens to weigh on the economy. Some analysts have pushed back forecasts for the first rate increase to November. 12:00 in London (07:00 EST)

Germany’s Federal Statistics Office publishes its first report on economic growth for last year. 10:00 CET in Berlin (04:00 EST).

The ECB will publish the account of its

Dec. 2-3 monetary-policy meeting, when it decided to cut the deposit rate to minus 0.3 percent and extend large-scale asset purchases by six months to March 2017. 13:30 CET in Frankfurt (07:30 EST).

ECB President Mario Draghi andExecutive Board member Benoit Coeureparticipate in a Eurogroup meeting. From 15:00 CET in Brussels (09:00 EST).

U.S. Republican presidential candidates hold their first debate of the new year, and the sixth of the campaign, in Charleston, South Carolina. 18:00 EST.

St. Louis Fed President James B. Bullard gives an economic briefing in Memphis, Tennessee. 07:30 (08:30 EST).

CENTRAL BANKS: South Korea rate decision, Chile rate decision, Peru rate decision, Indonesia rate decision, Poland rate decision.

ECONOMY: U.S. import prices (Dec.), U.S. jobless claims (weekly), U.S. Bloomberg consumer comfort (weekly), Japan machinery orders (Nov.), Australia jobless rate (Dec.), Italy industrial production (Nov.), Hungary CPI (Dec.), South Africa manufacturing PMI (Dec.).

FRIDAY

New York Fed President William C. Dudley speaks on economy and U.S. Fed policy. 09:00.

U.S. retail sales probably climbed in December for a third month, indicating consumer spending is helping give the economy a boost, economists project the Commerce Department to report. 08:30.

Industrial production in the U.S. probably declined in December for a fourth month, economists forecast a Federal Reserve report to show. 09:15.

ECONOMY: U.S. producer prices (Dec.), U.S. Empire State manufacturing (Jan.), U.S. Michigan consumer sentiment gauge (Jan. prelim.), U.S. business inventories (Nov.), China money supply (Dec.), France budget balance (Nov.), Romania GDP (third quarter), Poland CPI (Dec.), Russia trade (Nov.), Kazakh industrial production (Dec.), Turkey unemployment rate (Oct.), Israel CPI(Dec.).

Europe

The sound of bickering among Spanish politicians is being drowned out by Mario Draghi, at least when it comes to the bond market. Spain’s election on Dec. 20 ended a four-year majority for Prime Minister Mariano Rajoy and left a deadlock over who will form the next government as parliament reconvenes this week. The European Central Bank’s bond purchase program, known as quantitative easing, is buying politicians time as they argue over who should run the euro region’s fourth-biggest economy. The yield on 10-year bonds compared with German bunds has risen just six basis points since the vote.

If Mark Carney made a New Year’s resolution to raise U.K. rates, the rest of the world isn’t helping. Since the Bank of England’s meeting last month, oil has dropped to a 12-year low, the World Bank cut its global growth forecasts, and China’s yuan devaluation wiped $4 trillion from global equity markets. Those headwinds may overshadow any pressure Governor Carney might have faced to follow the U.S. Federal Reserve, which raised its key rate for the first time since 2006 last month. With inflation stuck near zero and price pressures softening, economists nowdon’t see the BOE increasing the key rate from 0.5 percent until the third quarter.

Asia

Interbank yuan lending rates in Hong Kong climbed to records across the board after suspected intervention by China’s central bank last week mopped up supplies of the currency in the offshore market. The city’s benchmark rates for loans ranging from one day to a year all set new highs, with the overnight and one-week surging by the most since the Treasury Markets Association started compiling the fixings in June 2013.

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