Key Macro Events In The Coming Week

Next week’s calendar is packed with important events and releases, aside of course from the biggest event of the week which are the Italian elections. In fact we already got the first one in the form of China's disappointing HSBC flash PMI which consensus expectations would print stable yet which dropped to a 4 month low. On Friday, the ISM is expected to come out mildly softer vs last month’s strong 53.1 print and consensus at 52.5. Chicago PMI will also be followed by markets on Thursday. On the central bank front markets will be primarily looking for further news on the BOJ leadership succession front. From the perspective of Fed speakers, Chairman Bernanke’s testimony ahead of the Senate Banking Committee will also be followed as markets continue to track the Fed’s assessment of the economic recovery. In the global currency warfare front, the Bank of Israel is expected to cut policy rates by 25bps on Monday, as well as the National Bank of Hungary on Tuesday.

Monday February 25

  • China Flash PMI: Consensus expectations are for a read of 52.2, almost flat from last month’s 52.3
  • Israel MPC: Consensus expectations are for no change from the current level of 1.75%. Goldman sees a 25 bps cut.
  • Also interesting: Mexico Current Account, Singapore CPI

Tuesday February 26

  • Hungary MPC: Consensus expects the Central Bank to cut the policy rate by 25 bps to 5.25%.
  • US Consumer Confidence: Consensus forecasts an improvement in US consumer confidence in February from 58.6 to 62.0.
  • US Case Shiller Home Price Index: Consensus expectations are for an increase of 0.5%, down from 0.6% from the last report.
  • US New Home Sales: Consensus at 3.0% better than last month’s -7.3% reading.
  • Fed Chairman Bernanke testifies at the Senate Banking Committee
  • Also Interesting: US Richmond Fed, Mexico Trade Balance, Taiwan Export Orders, Japan Retail Sales

Wednesday February 27

  • US Durable Goods Orders: Consensus at -4.0% on a plunge in airrcraft orders, after a strong December read of 4.3%.
  • Also interesting: Euro Area Consumer Confidence, UK Q4 revised GDP

Thursday February 28

  • US Q4 GDP (Second Estimate): Consensus at 0.5% up substantially from the first estimate at -0.1%
  • US Chicago PMI: Consensus at 54.1 down from last month’s 55.6
  • US Initial Jobless Claims: Consensus expects 360,000, stable from last month’s 362,000.
  • Also interesting: Germany Retail Sales, Euro Area HCPI, Japan Unemployment Rate, Japan/South Korea Industrial Production, India Q4 GDP

Friday March 1

  • US ISM Manufacturing Index: Consensus at 52.5 down from last month’s 53.1.
  • US U. Michigan Consumer Sentiment: Consensus expects no change from last month’s read both at 76.3.
  • US Personal Spending: Consensus expects an increase of 0.2%, stable from last month.
  • US Personal Income: Consensus expects a 2.0% decline.
  • Russia MPC: Central Bank expected to be on hold.
  • Global PMIs
  • Also Interesting: US Construction Spending, Euro Area Unemployment rate, Korean Exports, Canada GDP, Brazil Trade Balance, Chile MPC minutes, Polish Q4 GDP.

Visually from SocGen:

And also from SocGen, top issues for the week ahead:



Citing the “continuing weakness in the UK's medium-term growth outlook” and the challenges that this poses to the government's fiscal consolidation, Moody’s Friday lowered the UK’s rating from Aaa to Aa1. Moody’s now have a stable outlook on the UK, suggesting no further downgrade is imminent. S&P and Fitch (both still attribute a triple-A rating to the UK) have a negative outlook. Over the weekend, Chancellor Osborne stated that the change in rating would not trigger any change in policy, but politically the downgrade does bring a setback. The UK’s loss of a full suite of triple-A ratings follows those of the US and France as recent examples.

Debt sustainability is the big picture issue, and while the Fed and the BoE have been able to deliver financial repression offering some relief on debt snowballs, the situation for the European periphery clearly remain a far greater challenge. As we have highlight on numerous occasions, the ECB’s OMT brought the final brick in effectively addressing the issue of funding. Solvency, however, requires economic growth. We’ll be writing more about this next week, but this is where we see the much greater challenge.

This week in the UK, the upwards revision to construction output and industrial production offer the possibility of what would be a welcome upside revision to the preliminary Q4 GDP report at ?0.3%, but our baseline is for unchanged. The breakdown is set to show weak consumer spending in Q4, albeit partly related to Olympic driven swings. A modest improvement in the CBI distributive trades survey will offer some encouragement on the UK consumer, but the overall picture remains weak. The February PMI survey at the end of the week, however, is set to see a modest pullback to 50.3 from

MARKET ISSUES: Lacklustre data will keep hopes of the “Carney put” active.


Unless Congress decides otherwise, 1 March will see $85bn worth of spending cuts strike government programs (with about half on defence spending). Based on recent developments the sequester is likely to kick in on Friday. If not subsequently reversed, our Chief US Economist, Aneta Markowska, estimates that this would take 0.2pp off GDP for the remainder of this year. The next key date on the US budget agenda then is the 27 March expiration of current continuing resolutions. At this stage, the GOP do not intend to shutdown government and we believe they will be happy to extend funding.

Should Congress fail to agree a budget blueprint by 15 April, then legislators would see pay withheld. Finally, on 18 May, the temporary removal of the debt ceiling ends.

MARKET ISSUES: Uncertainty on the budget outlook is set to remain for now, but once lifted this alone should prove a positive.


A flurry of sentiment data will hit the tapes this week from across the world. Last week’s advance manufacturing PMI for the euro area declined to 47.8, and this despite gains in Germany and France. The implication is further weakness on the European periphery and we look for weaker sentiment readings in both Italy and Spain for February. In the UK, we also look for modest decline to 50.3. Turning to the US the February PMI should see the third consecutive monthly gain, climbing to 54. In Asia, we expect PMI in China to post a modest gain to 51 after 50.4. A bounce in the Bank of Korea’s business confidence for March will add confidence to the cyclical recovery in Asia, albeit in part related to seasonal factors.

MARKET ISSUES: The global economic picture remains divided and with that the debate on the next steps on policy action. While the QE exit debate dominates in the US, the question remains whether the ECB and BoE can and will do more.


This week could see a new BoJ governor nominated as Mr Shirakawa prepares to step down on 19 March. According to press, the most likely  candidate is Asian Development Bank President Mr. Kuroda. Mr. Kuroda has been supportive of Abenomics, and this suggests further BoJ easing on the cards. The government will consult with opposition parties before officially presenting the nominee to the Diet, since both the lower and the opposition-lead upper house must confirm the nomination. MARKET ISSUES: With the G20 critical of currency interference, the new BoJ leadership will be careful to communicate any policy easing as having a domestic focus (perfectly mirroring the Fed’s communication on QE).