Upcoming Data Likely to Show Economy Picking Up

Looking ahead to next week's economic calendar, there is very little in the way of news. Nevertheless, the news that will be released could be potent, particularly because there will be several items on the housing market and news from abroad that could impact the interest rate situation.

Another potentially important piece of news will be the release of durable goods orders for December, which will help answer the question over whether or not the factory sector is in the midst of a rebound.

In general, the data for the week are expected to reinforce the notion that economic growth has accelerated in the U.S. of late.

The number of monthly reports due out can be counted on one hand. There will be three releases: December existing-home sales on Thursday, then December new-home sales and durable goods orders on Friday. The home sales reports will be scrutinized, mostly for the progress made on the inventory front, which is the most important issue facing the housing sector.

The greater the decline, the faster investors will see the timeline on the housing market's recovery. Slow progress would spell a longer drag, leaving intact concerns about the economic dangers posed by housing. Recent data on mortgage applications suggest that sales have indeed picked up, helped by both unseasonably warm temperatures and big incentives.

Additional information on the housing sector can be taken from the Wednesday release of the weekly data on mortgage applications, which have been very firm of late, partly because of problems adjusting for seasonality. As each week passes, these distortions will dissipate and the data will give a clearer signal on housing demand.

The durable goods report might seal the view that automobile production has bottomed. If so, it will feed optimism on the near-term outlook on the economy. The data also will be important because they will be key for forecasting fourth-quarter gross domestic product, which will be released for the first time on Jan. 31.

Looking abroad, the economic calendar is relatively light, although in Japan the minutes to the Bank of Japan's December meeting will be released on Tuesday. Japan also will see the release of its consumer price index on Thursday. On Thursday, the Bank of England will release the minutes from its recent meeting, which produced an earlier-than-expected interest rate hike.

All of this news will be important on the interest rate front.

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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.

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