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Economic events to watch for this week…

October 10, 2011

Several key economic indicators to watch for this week. With Belgium’s purchase of Dexia’s Belgian operations, the can will be kicked further down the road. I anticipate the markets finishing down on the week. Last month’s decent economic numbers were aided by the end of Verizon strikes and other temporary employment boosters.

 

Courtesy of ZeroHedge,

 

“Despite a violent round trip during the week, most assets finished last Friday (October 7) at levels that were quite close to those seen at the end of the previous week. In fact, the DXY managed to change less than 0.1% from one Friday’s close to the next. Positioning indicators suggest speculative exposure remains virtually unchanged as well, and still stretched long USD. Outside G10 currencies, some very strong rallies have been recorded in EM space, with Latam currencies leading the pack.

During the week, the BOE surprised with more QE than expected, whereas the ECB delivered the strict minimum relative to market expectations – no rate cut, but a dovish assessment of the economic outlook, which opens the door for rate cuts before the end of the year. This came together with two new LTRO operations and a smallish covered bond purchase program. Markets were initially disappointed by the ECB action but the knee-jerk sell-off in risky assets and the Euro quickly reversed.

Last week’s macro data was generally close to low expectations or slightly better. Most of all, the payrolls and the non-manufacturing ISM in the US suggested that economic momentum has now clearly stabilised at low levels.

Key this week will be the final missing EFSF votes, in particular Slovakia. The latest headlines over the weekend suggest the governing coalition has still not found a compromise and will meet on Monday again. The votes of 22 MPs for the SaS party in the 150-member Slovakian government are now the main stumbling block to bringing the effective EFSF lending capacity to EUR440bn and to increase the EFSF’s flexibility. The parliamentary EFSF vote is scheduled for Tuesday. On Monday, the second-to-last vote on the EFSF will be held in Malta.

Still linked to the Eurozone crisis, President Sarkozy and Chancellor Merkel agreed over the weekend on the need for bank recapitalisations and the need to find a “durable” solution for Greece. There has also been talk about a “vision” for the Eurozone and a promise for a plan by the November 3 G20 summit. Markets will likely focus on any additional details regarding the bank recapitalisation plan. Of course, Greek issues will remain important as well, in particular after Troika officials have been quoted in the media as criticizing the Greek Government’s determination to implement structural reforms. The results from the Italian bond auction on Thursday may increase the pressure on the Italian government to undertake more growth-enhancing structural reforms, as again demanded over the weekend from the next ECB President Draghi.

On the macro side, the second week of the month is typically quiet with US retails sales, the US trade balance and early reading of U Michigan consumer sentiment. In Europe we get more IP numbers.

Monday 10th

  • Malta EFSF Vote
  • Slovakia governing coalition meeting to find a compromise on the EFSF

Tuesday 11th

  • UK Aug IP (consensus -0.2%mom, after 0.2% in Jul)
  • Slovakia EFSF vote. This is the final of 17 necessary national votes to implement the EFSF changes

Wednesday 12th

  • Eurozone Aug IP (consensus: 0.7%mom, after 1% in Jul)
  • Japan Aug Machine Orders (consensus: 3.9%mom, after -8.2% in Jul)
  • FOMC Minutes

Thursday 13th

  • Italy Bond Auction
  • US Jobless Claims (consensus 405k after 401k)
  • US Trade Balance (consensus -$46bn after -$44.8bn)

Friday 14th

  • Eurozone Sep CPI (will the preliminary reading of 3% be confirmed?)
  • U Michigan Oct Consumer Confidence (consensus: 60, after 59.4 in Sep)
  • US Sep Retail Sales (consensus: 0.6%mom, after 0 in Aug)”

Source: Goldman Sachs

 

 

 

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