Why the FOMC meeting will dominate the headlines this week

This week will be all about the FOMC meeting

The upcoming week has some important economic data, like housing starts and industrial production, but the FOMC meeting will dominate. Further tapering is more or less assured. The taper should completely finish by the end of the year. Investors will focus on Janet Yellen’s “dot graph,” which gives the rate forecasts by the individual Fed members.

Economic data this week

Monday, September 15, 2014

• Empire Manufacturing
• Industrial production
• Capacity utilization
• Manufacturing production

Tuesday, September 16, 2014

• Producer Price Index
• TIC flows

Wednesday, September 17, 2014

• Mortgage Bankers Association (or MBA) mortgage applications
• Consumer Price Index
• Current account balance
• NAHB Housing Market Index
• FOMC rate decision

Thursday, September 18, 2014

• Initial jobless claims
• Bloomberg Consumer Comfort
• Housing starts
• Building permits
• Philly Fed
• Household net worth

Friday, September 19, 2014

• Index of Leading Economic Indicators

Earnings reports this week

Wednesday, September 17

• Lennar Corp. (LEN)

Impact on mortgage REITs

Mortgage real estate investment trusts (or REITs), like American Capital Agency (AGNC) and Annaly (NLY), will focus on data that will move the bond market. For the mortgage REITs, that event will be the FOMC meeting on Wednesday. Investors will focus on the language in the statement regarding the expected increase in interest rates. This meeting will also include updated economic forecasts, which will move the market as well.

Impact on homebuilders

There’s some data that will interest the builders this week—particularly the housing starts and building permits numbers as well as Lennar’s (LEN) earnings.

We’re heading into the seasonally slow period of fall and early winter. Homebuilder analysts will focus on the geographies that are experiencing the most growth.

Impact on commercial REITs

Mall REITs like Simon Property Group (SPG) and General Growth Properties (GGP) will probably pay the most attention to the net worth data coming out of the Fed. Asset price inflation is a big driver of consumer spending, as is de-leveraging.

Office REITs like Boston Properties (BXP) and Vornado Realty Trust (VNO) will be interested in the industrial production data.