This week, markets will continue to monitor updates regarding the “phase one” trade deal that was reached Friday. Meanwhile, economic reports including housing starts, existing home sales, industrial production and personal consumption and spending will also be in focus. While earnings reports are limited, FedEx and Nike will release results Tuesday and Thursday, respectively.
After more than a year, the U.S. and China announced that the two sides reached an initial trade deal. The Nasdaq (^IXIC) and S&P 500 (^GSPC) closed at record highs Friday following the news. According to the U.S. Trade Representative’s office, “The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.”
However, no signing date has been scheduled yet. Investors will remain hyper-focused on further developments until a formal signing is announced. “the main near-term impact of the phase one deal, assuming it actually gets signed, is that it removes the threat of final consumer tariffs and adds to the sense that the downside risks to the economy are fading,” Capital Economics said in a note Friday.
Tuesday, the Census Bureau will release November’s housing starts data. Economists polled by Bloomberg expect housing starts rose for the second consecutive month November to a seasonally adjusted 1.340 million units, up from 1.314 million in October. Meanwhile, existing home sales are expected to have dipped slightly in November to a seasonally adjusted 5.44 million units, down from 5.46 million units in October.
“We expect existing home sales to rise slightly in November, increasing 0.2% MoM to 5.47m. This would continue to push YoY growth higher to 5.0%, the best since early 2017,” Credit Suisse wrote in a note Thursday. “Pending home sales retreated this month after two months of solid gains, suggesting risks of a small miss in sales. But with elevated consumer confidence, low mortgage rates, and a solid labor market, we expect continued improvement in sales heading into 2020.”
Finally, economists surveyed by Bloomberg predict that personal spending rose 0.4% during November and personal income rose 0.3%. “Spending on goods likely rose at a steady pace in November with a boost from auto purchases. Expenditures on autos declined sharply in October. We expect a rebound in this component to support overall spending growth in November,” Nomura said. “Overall, given strong consumer fundamentals, we expect consumer spending growth to remain resilient in the near-term.”
Monday: Empire Manufacturing, December (4.3 expected, 2.0 in November); Markit US Composite PMI, December preliminary (52.0 prior); Markit US Manufacturing PMI, December preliminary (52.6 expected, 52.6 prior); Markit US Services PMI, December preliminary (51.8 expected, 51.6 prior); NAHB Housing Market Index, December (70 expected, 70 in November); Net Long-term TIC Flows, October ($49.5 billion in September); Total Net TIC Flows, October (-$37.6 billion in September)
Tuesday: Housing Starts, November (1.340 million expected, 1.314 million in October); Building Permits, November (1.405 million expected, 1.461 million in October); Industrial Production month-on-month, November (0.8% expected, -0.8% in October); Capacity Utilization, November (77.4% expected, 76.7% in October); JOLTS Job Openings, October (7009 expected, 7024 in September)
Wednesday: MBA Mortgage Applications, week ended December 13 (3.8% prior)
Thursday: Current Account Balance, Q3 (-$122.1 billion expected, -$128.2 billion prior); Philadelphia Fed Business Outlook, December (8.0 expected, 10.4 in November); Initial Jobless Claims, week ended December 14 (225,000 expected, 252,000 prior); Continuing Claims, week ended December 7 (1.667 million prior); Bloomberg Consumer Comfort, week ended December 15 (62.1 prior); Leading Index, November (0.1% expected, -0.1% in October); Existing Home Sales, November (5.44 million expected, 5.46 million in October); Existing Home Sales month-on-month, November (-0.4% expected, 1.9% in October)
Friday: GDP Annualized quarter-on-quarter, Q3 third reading (2.1% expected, 2.1% prior); Personal Consumption, Q3 third reading (2.9% expected, 2.9% prior); GDP Price Index, Q3 third reading (1.8% expected, 1.8% prior); Core PCE quarter-on-quarter, Q3 third reading (2.1% expected, 2.1% prior); Personal Income, November (0.3% expected, 0.0% in October); Personal Spending, November (0.4% expected, 0.3% in October); University of Michigan Sentiment, December final (99.2 expected, 99.2 prior)
Tuesday: FedEx (FDX) after market close
Friday: CarMax (KMX) before market open
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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