All eyes will be on the new administration and their new policies this week. There also is not a lot of data for the markets to digest. We do get some forward-looking releases with the Philly Fed Services Index Tuesday, the Kansas City Fed Index Thursday, and then the preliminary PMIs for January from S&P on Friday. We also get Home Sales on Friday. Given the weakness in Building Permits last week and that Mortgage Applications are at decade lows, it is difficult to see how Home Sales surprises to the upside, but that is one release to keep an eye out for.

The Macro Week Ahead

Positive Surprises Last Week
We enter this week with the Bloomberg Economic Surprise Index in slightly negative territory, showing little change in trend since late December. The industrial sector of the economy and business cycle indicators have exerted downward pressure on the index over the past month. However, last week we saw positive surprises, including the December NFIB Small Business Optimism Index (105 vs. 102 expected) and the January Philly Fed Business Outlook (44 vs. -3 expected). These are two important leading indicators of growth trends, and their recent movements suggest that the business cycle may be accelerating. We saw some confirmation of that with the ISM Manufacturing New Orders Index rising to 52.5 last month.

Leading Indicators Of Growth Improving
This week’s macro data releases are relatively light. On Tuesday, we will see the Philly Fed Non-Manufacturing Activity Index for January. This data has been volatile and rangebound between -20 and +5 since 2023, so it will be interesting to see whether the optimistic outlook reflected in the Philly Fed business numbers translates into improvements in the services sector. 

On Wednesday at 10:00 am, the Conference Board’s U.S. Leading Index for December will be released. Following other key leading indicators since the election, we wouldn’t be surprised to see some upside relative to the expected -0.1% month-over-month change. The Leading Index is made up of 10 components, both financial and non-financial, such as the S&P 500, ISM New Orders, Building Permits, Initial Claims, and Credit Spreads. On Friday, we’ll get additional data for January with the preliminary S&P Global U.S. Composite PMI. The overall composite stood at 55.4 in December, driven by a Services PMI of 56.8 and a Manufacturing PMI of 49.4. If the NFIB data is any indication, the more forward-looking components of these indices could show incremental improvements.

Housing Data On The Docket
The MBA Mortgage Applications report will be released Wednesday. While we don’t often discuss this data due to its volatility, last week’s 33.3% reading came in well above expectations when interest rates increased. Given that mortgage applications tend to move in tandem with interest rates, this can likely be attributed to seasonal factors, but it’s interesting to note the deviation from the trend implied by mortgage rates. Finally, on Friday, we’ll see December’s existing home sales data, which is expected to show a modest +1.2% month-over-month gain. As we’ve discussed previously, given the challenges of poor affordability and elevated interest rates, we do not anticipate sustainable growth in the housing market in the near term.

The Macro Specialist Designation (M² SD)

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The Macro Week In Review

Macro Job Board

Global Market Strategist @ New York Life Investments (New York)

In this role you will develop capital markets perspectives, portfolio strategy, and trade ideas through original research and apply macroeconomic themes to alternative and private markets conditions. 

VP, Macro Research, Cross Asset Strategist @ JP Morgan (New York)

You will focus primarily on developing and presenting a broad strategic and tactical asset allocation across different products/markets and jurisdictions. You will part of a team that has the objective to develop a coherent framework for valuations and positioning across asset classes.

Global Macro Research Analyst @ Goldman Sachs (Washington, DC)

This candidate will closely monitor political and policy developments 
and assist economists to publish timely and innovative research on macroeconomic, political, and policy developments and their economic impact. They will also work on economic research projects and publications.

What We Read This Weekend

1. Here Are Trump’s Expected Executive Orders

2. Trump to Hold Off on Immediate China Tariffs, Calls for Study

3. Quantifying the Beige Book’s “Soft” Data

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