Previewing Next Week's Events
Next week will be relatively light in economic reporting, and with no HFT exchange IPOs on deck, and the VVIX hardly large enough to warrant a TVIX type collapse, it may be downright boring. The one thing that will provide excitement is whether or not the US economic decline in March following modestly stronger than expected January and February courtesy of a record warm winter, will accelerate in order to set the stage for the April FOMC meeting in which Bill Gross, quite pregnant with a record amount of MBS, now believes the first QE hint will come. Naturally this can not happen unless the market drops first, but the market will only spike on every drop interpreting it for more QE hints, and so on in a senseless Catch 22 until the FRBNY is forced to crash the market with gusto to unleash the NEW qeasing (remember - the Fed is now officially losing the race to debase). For those looking for a more detailed preview of next week's events, Goldman provides a handy primer.
From Goldman Sachs
The data releases last week were a bit mixed, with strong export orders in Taiwan and continued strong US Jobless claims, but weaker flash PMIs in Europe and China. In contrast to the PMI, the French business confidence survey improved in March.
In the coming week, it will be interesting to watch if German IFO index also contradicts the surprisingly weak Flash Eurozone PMI, similar to the INSEE already. In Europe, the focus will also be on the Euro area flash CPI, where we expect some moderation to 2.5%yoy as the decline in non-core components will likely continue. Aside from the inflation numbers, there will be an informal EcoFin Meeting on Friday and Saturday, where an increase of the ESM is likely to be discussed again.
In terms of US activity data, the focus will be on the Chicago PMI, Durable Goods and Personal Income. Though we do expect a technical rebound in the durable good orders after the weakness in the previous report, we think the Chicago PMI could slip by more (to 60 from 64) than consensus expects. Overall, the message from US activity data may therefore remain mixed outside the still-strong labour market data.
In terms of Asian activity data, the end of the week will be important. The official China PMI for March will be interesting after the weakness in the Flash PMI. Korean trade is the first non-survey based activity indicator published globally that is published for the previous month. Both are due next Sunday.
In terms of FX markets, we will remain quite focused on the Yen, partly because of our recommendation and partly because of the fiscal year-end in Japan and related possible last-minute volatility. The IP number for February could be important as the main data release for Japan in the upcoming week. Given the focus on rate differentials for $/JPY, but also more broadly for the Dollar, three speeches by Chairman Bernanke on Monday, Tuesday, and Thursday could be relevant. The upcoming week is very heavy on Fed speeches with at least one scheduled every day.
Finally, there are central bank meetings in Turkey (watch for any references to Lira weakness), Hungary, Czech Republic, and South Africa.
Monday 26 March
Germany IFO (Mar): Consensus expects 109.7 after 109.6 in February.
Singapore IP (Feb): Consensus expects 4.1%mom after 303% in January.
Israel CB Meeting: We expect no change from 2.50%, in line with consensus.
Argentina GDP (Q4): We expect 7.8%yoy vs consensus of 7.5% after 9.3% in Q3.
Ben Bernanke Speech
Tuesday 27 March
US Consumer Confidence (Mar): Consensus expects 70.4 after 70.8 in February. GS: 71.0
S&P Case Shiller Home Price Index (Jan): Consensus expects -0.3%mom after -0.5 in December. GS: +0.2%
Turkey CB Meeting: We expect no change from 5.75%, in line with consensus. The focus will be on the guidance from the central bank with respect to the tighter liquidity conditions to manage money market rates in face of continued Lira depreciation pressure.
Hungary CB Meeting: We expect no change from 7.00%, in line with consensus.
Ben Bernanke Lecture
Italian Bond Auction (2/10yr)
Wednesday 28 March
Germany Flash CPI (Mar): Consensus expects 0.4%mom after 0.9% in February.
US Durable Goods Orders (Feb): Durable goods orders likely rebounded smartly in February after a sharp drop at the start of the year. Consensus expects 2.9%mom after -4.0% in January, GS: +3.5%.
Sweden NIER Survey (Mar): Consensus expects -1.5 after -3.2 in February.
ECB's Weidmann Speech
Also interesting: France/UK Q4 GDP (3rd)
Thursday 29 March
Japan Retail Sales (Feb): Consensus expects -0.2%mom after 4.1% in Januray.
US GDP (Q4 3rd): We expect no change from the second reading of 3.0%qoq ann, in line with consensus.
South Africa CB Meeting: We expect no change from 5.50%, in line with consensus.
Czech Republic CB Meeting: We expect no change from 0.75%, in line with consensus.
Italian Bond Auction (5/10yr)
Friday 30 March
UK Consumer Confidence (Mar): Consensus expects no change from -29 in February.
Japan CPI (Feb): Consensus expects 0.0%yoy after 0.1% in January.
Euro area flash CPI (Mar): We expect 2.5%yoy after 2.7% in February, in line with consensus.
US Personal Income/Spending (Feb): Consensus expects income to grow by 0.4%mom after 0.3% in January (GS: +0.5%), whereas spending is seen to have risen by +0.6%mom by GS and consensus from +0.2% in January.
Switzerland KOF (Mar): Consensus expects 0.1 after -0.12 in February.
Canada GDP (Jan): Consensus expects 0.1%mom after 0.4% in December.
US Chicago PMI (Mar): Consensus expects a moderate decline to 63 from 64 in Feb. We see the risk skewed to a bigger decline to 60.
EU finance minister meeting (informal EcoFin)
Also interesting: South Korea Q4 GDP (3rd), Chile/Mexico Central Bank Minutes, US Mar Chicago PMI, Japan/South Korea Feb IP
Saturday 31 March
India Current account balance (3QFY12): We expect the current account deficit to rise to US$20.1 bn (4.4% of GDP) in 3QFY12 from the US$16.9 bn (3.8% of GDP) previously, on a higher trade deficit. Coupled with capital outflows due to the European crisis, this is expected to keep the BBoP in deficit.
Sunday 1 April
China Official PMI (Mar): We expect the March official PMI to be largely stable. The flash reading of the HSBC/Markit PMI fell by more than 1 percentage point from its January-February average, which suggests weak growth. However, loan supply has been picking up recently which may raise the final reading and seasonal patterns also suggest a slightly stronger March reading in the official PMI.
Korea Trade Balance (Mar): We expect exports to maintain a positive sequential momentum following weaknesses in January and early-February. High frequency data suggests that daily exports in March could have increased around 5% yoy (0% yoy on the headline) if the recent trends continue. Korean trade data is globally the most timely activity indicator not based on surveys.