Economic Analysis

The most important data expected this week

United State

New Home Sales - Wednesday (5pm)

New home sales in the US jumped 12.4 percent month-over-month to a seasonally adjusted annual rate of 744,000 in November of 2021, after a downwardly revised 662,000 in October. It was the fastest rise in seven months and the highest reading since April, but below market expectations of 770K. Positive contributions from the West (53.2 percent), the Northeast (15.6 percent) and the South (2.7 percent) were partially offset by a decrease in the Midwest (-25.4 percent). The median sales price of new homes sold in November 2021 was $416,900 14.1% higher than it was a year ago. There were 402,000 new homes for sale on the market. At the current sales pace, it will take 6.5 months to exhaust the supply of new homes, compared to 3.6 months at the beginning of the year.

US Crude Oil Inventories - Wednesday (5:30 pm)

Crude oil inventories in the United States rose by 1.404 million barrels in the week ending January 14, 2022, after a decrease of 1.077 million barrels in the previous week and compared to market expectations for a decline of 1.367 million. It was the first weekly increase after seven consecutive weeks as crude oil stocks fell.

US Federal Reserve Interest Rate Decision - Wednesday (9pm)

Fed Chair Powell sees inflationary pressures continuing through mid-2022 and expects the Fed to raise interest rates and end asset purchases this year while balance sheet contraction may begin later in 2022. During the Senate confirmation hearing, Powell also indicated that the Fed could begin The Federal Reserve raises interest rates further if necessary, to bring inflation back to the target level and prevent it from entrenching. The Fed announced at its December 2021 meeting that it would end its pandemic bond purchases in March, paving the way for three rate increases by the end of 2022. But the FOMC meeting minutes released later showed the Fed more hawkish, The central bank indicated that an increase in the federal funds rate may be warranted sooner or faster than previously expected.

Core Durable Goods Orders (MoM) (December) - Thursday (3:30 PM)

New orders for durable goods manufactured in the United States rose 2.5 percent month-on-month in November 2021, extending gains from a revised 0.1 percent increase in October and compared to market expectations for a 1.6 percent increase. Orders for transportation equipment rebounded significantly (6.5 percent versus -0.3 percent in October), namely aircraft and non-defense parts (34.1 percent versus -4.1 percent) and defense aircraft and parts (3.0 percent versus -18.5 percent). Metal manufactured products also saw a rebound in orders (0.6% vs -0.7%), while orders for computers and related products rose at a stronger pace (4.0% vs. 1.2%). Excluding defense, new orders rose 2.0 percent, and transfer orders increased 0.8 percent, beating expectations for a 0.6 percent gain. Meanwhile, orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, fell 0.1 percent, missing expectations for an increase of 0.6 percent.

GDP (QoQ) (Q4) - Thursday (3:30 pm)

Prices of all goods and services included in GDP grew 5.9 percent year-on-year in the third quarter of 2021, accelerating slightly from a 5.7 percent rise in the previous quarter.

Unemployment Claims Rate - Thursday (3:30 pm)

The number of Americans filing new claims for unemployment benefits rose by 55K from the previous period to 286,000 in the week ending Jan. 15, the highest level since mid-October and well above market expectations of 220K. It was also the largest weekly increase in claims since mid-July, as the surge in COVID-19 cases driven by the Omicron variant disrupted business and as employers continued to struggle to retain workers amid a record spike in job quits. On a seasonally unadjusted basis, initial claims fell by 83K to 337K, with notable declines recorded in New York (-14.0K), Missouri (-7.5K) and Texas (-6.1K).

Pending Home Sales Index (MoM) (Dec) - Thursday (5pm)

Pre-owned US home purchases fell 2.2% per month in November of 2021, compared to market expectations for a 0.5% rise, and after a 7.5% rise in October, amid tight supply and rising home prices. Each of the four major regions saw a decline in contract transactions. On an annual basis, pending home sales fell 2.7%. “There were fewer pending home sales action this time around, which I'll attribute to a lower housing supply, but also to buyers' reluctance about home prices. While I don't expect a price drop, or another year of record price gains, the market will see more inventory. In 2022 this will help some consumers bear the costs.”

Canada

Central Bank of Canada rate decision - Wednesday (5 pm)

The Bank of Canada decided to keep its overnight rate target at 0.25%, in line with expectations and maintain its forward guidance, which sees the overnight rate rise sometime in the middle quarters of 2022. Until then, policy makers have pledged to provide an appropriate degree of monetary stimulus To support the Canadian economy and achieve the 2% inflation target. On the price front, ongoing supply disruptions continue to support high inflation, but gasoline prices, which have been a major risk factor, have recently fallen. However, the Bank of Canada still expects inflation to remain elevated in the first half of 2022 and decline around 2% in the second half of the year. Finally, recent economic indicators indicated that the economy had great momentum in the fourth quarter, specifically in the labor and housing markets, but the omicron variable of the Corona virus and the devastation caused by the floods in British Columbia increased the downside risks.

New Zealand

Consumer Price Index (Quarterly) (Q4) - Wednesday (11:45 pm).

New Zealand's CPI rose 2.20 per cent qoq in the third quarter of 2021, the highest since the December 2010 quarter and above expectations of 1.4 per cent. The main drivers were housing-related costs, such as building new homes and local authority rates.