Written Commentary
- Another busy day for rather more second tier statistics; digesting Chine Home Prices, Japan Orders and Trade, Australia Unemployment and Biden-Xi meeting outcome; awaiting US Industrial Production, Jobless Claims, Philly Fed Manufacturing, NAHB & Import Prices; Walmart tops earnings run; numerous central bank speakers, France & Spain debt sales
- U.S.A.: Industrial Production seen falling on autoworker strike; Import Prices set to echo CPI and PPI; Philly Fed seen edging up, but still negative; Jobless Claims to continue sideways trend
- Court rulings push national politics back into the spotlight in UK and Germany
EVENTS PREVIEW
While there is a reasonably busy run of economic data to contend with, it is distinctly second tier relative to yesterday’s bonanza, amounting to digesting China New Home Price fall, Japan’s Trade and Machinery Orders, and stronger than expected Australia labour data, with US Import Prices, Weekly Jobless Claims, Philly Fed Manufacturing, Industrial Production and NAHB Housing Market Index ahead. There is also a busy run of central bank speakers, but many will be talking about macro-prudential issues at the European Systemic Risk Board annual conference, with NY Fed’s Williams speak at the US Treasury Markets Conference. Alibaba, Walmart and Macy’s top the most run of corporate earnings reports, while France and Spain hold multi-maturity bond auctions. Politics are once again in the headlines above and beyond the dark shadows of the wars being waged in Gaza and Ukraine, with the Biden Xi meeting outcome signalling a continued thaw in bilateral relations but nothing more, just as both the UK and German governments found themselves on the wrong side of constitutional/supreme court rulings yesterday. In the UK this was more a case of a further loss of credibility for an already very beleaguered Prime Minister, while in Germany the ruling against the reallocation of Covid funds to climate change funding will necessitate a sharp budget rethink, likely involving some fiscal tightening for an already very fractious and divided coalition, which was already struggling to find common ground on how to boost a stalling economy.
** U.S.A. – Import Prices, Industrial Production, Jobless Claims, NAHB Housing Index **
– Import Prices complete this week’s run of inflation data, and as with CPI and PPI could modestly undershoot expectations of -0.3% m/m for both headline and non-petroleum, given falls in both oil and other commodity prices, as well as a firm USD, but this would be more than a footnote confirmation of the CPI and PPI data. Weekly Jobless Claims have been stable at very low levels for a protracted period, and that is again expected to be the case this week (220K vs. prior 217K). Industrial Production and Manufacturing Output are both forecast to decline -0.4% m/m, with the now ended UAW strike having taken its toll, and some offset from higher utilities output due to unseasonably warm weather. The Philly Fed Manufacturing is seen marginally better on the month -8.3, but it will be the details on Orders, Output and 6-month Outlook which matter more. Meanwhile the NAHB Housing Market Index is forecast to steady around 40 after the setbacks of the past two months, with a modest decline in Mortgage Rates to a still high 7.61% offsetting structural demand for New Homes, due to low Existing Home inventories.
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