What Matters for Global Markets in The Week Ahead

 
   By Michael J. Casey, Alen Mattich and Colin Ng 
 

        MONDAY
        INDONESIA: 12 a.m. EDT (11 a.m. Monday, Jakarta) First quarter GDP [Previous +5.72% on-year, -1.42% on-quarter]
        The Indonesian economy demonstrated its resilience in the fourth quarter of 2013 when it posted stronger than expected economic growth, even though Bank Indonesia has been raising interest rates aggressively for months to cool the economy and keep inflation in check. An easing of inflation in April and a larger-than-expected trade surplus in March suggests that economic fundamentals continue to improve. April's HSBC PMI showed manufacturing conditions rose to an 11-month high, driven by domestic demand, with new orders only up slightly. So, there's reason to be optimistic, though in coming quarters the impact of last year's rate hikes could start dragging on growth.
        (CN)
        EURO ZONE: 5 a.m. EST (11 a.m. Brussels) March producer price index [Expected down 0.2% on the month and down 1.7% on the year vs. down 0.2% and down 1.7% in February]
        Soft producer prices will keep inflationary pressures at bay, though the panic about incipient deflation seems to have faded slightly following a slight uptick in the latest consumer price numbers. (AM)
        U.K.: Closed for Public Holiday.
        U.S.: 10 a.m. EDT Institute for Supply Management April non-manufacturing report on business. [ISM services index expected 54.1 vs. 53.1 in March.]
        If last week's ISM manufacturing report and government jobs report were any indication, this number should register similar signs of momentum in the first month of the second quarter. The services sector accounts for about two thirds of the U.S. economy. If it also exhibits signs of strength it could have a sizable impact on prices. (MC)
        WORLD: 11 a.m. EDT. Markit Economics April global manufacturing PMI. [Previous 52.4]
        This global indicator isn't closely followed but it's a unique effort to capture the state of manufacturing in the entire world and so is worth paying some attention to. There are continued concerns about a slowdown in China alongside hope that the euro zone and U.S. are recovering. What's the net effect of that on the global economy? (MC)
        AUSTRALIA: 9:30 p.m. EDT (11:30 a.m. Tuesday, Sydney), March International Trade in Goods & Services [previous balance on goods and services $1.2 billion, previous exports +0%, previous imports +1%]
        Australia has been posting bigger than expected surpluses as new records are set in commodity exports. Chinese demand for metals is surprisingly still running hot despite the slowdown there, and mines in Australia are coming online after massive capital investments in the sector in recent years, so there's supply to meet demand. The surge in exports is going to support the economy even as policymakers steer it away from its dependence on the resources sector.
        (CN)
        TUESDAY
        AUSTRALIA: 12:30 a.m. EDT (2:30 p.m. Tuesday, Sydney) Reserve Bank of Australia cash rate decision [previously no change]
        No change is expected, as the RBA continues to monitor the job numbers even among signs that the economy is picking up. At its last policy meeting, RBA governor Glenn Stevens said: "On present indications the most prudent course is likely to be a period of stability in interest rates," and added that the "The bank expects unemployment to rise further before it peaks." With the cash rate on hold at a record-low 2.5% since August, the bank will be looking to see how well the economy transitions to be less dependent on the resources sector in coming quarters as weak first-quarter inflation data killed off any urgency to raise rates for now.
        (CN)
        EUROPE: From 2:45 a.m. EST (9:45 a.m. Brussels) April services purchasing managers' indexes
        --ITALY [Expected 50.2 vs. 49.5 in March]
        --FRANCE [Expected 50.3 vs. 51.5 in March]
        --GERMANY [Expected 55.0 vs. 53.0 in March]
        --U.K. [Expected 57.9 vs. 57.6 in March]
        --EURO ZONE [Expected 53.1 vs. 52.2 in March]
        The European domestic demand story of recent months is likely to be reinforced by the latest set of services PMI surveys. France is barely treading water, Italy is rebounding and Germany and the U.K. are bucketing along. (AM)
        EURO ZONE: 5 a.m. EST (11 a.m., Brussels) March retail sales [Expected down 0.2% on the month vs. up 0.4% in February]
        Retail sales in the euro zone are likely to have seen a pullback in March following gains in February, but the overall picture remains one of the consumers' slow return to life. (AM)
        CANADA: 8:30 a.m. EDT. March international merchandise trade. [In February, trade surplus of C$290million; exports +3.6% on-month, imports +2.1%.]
        Last month's result marked a big turnaround from February for Canada, registering its first trade surplus in five months. The question is whether this is a bounceback from a comparatively low base or a genuine recovery in exports. The latter depends greatly on whether the U.S., Canada's biggest market, continues to recover.
        U.S.: 8:30 a.m. EDT. March international trade in goods and services. [Expected deficit $40.9 billion vs. $42.3 billion in February; February exports were 1.1% on-month and imports were +0.4% on --month.]
        February's widening in the trade deficit from $39.3 billion to $42.3 billion was driven by a decline in exports to a five-month low, and bucked a yearlong trend of narrowing in the trade gap. How much that was supply-driven (weather interruptions at home) and how much was demand-related (China's slowing economy and/or Lunar New Year disruptions) is not totally clear. What is certain is that the deficit contributed to the gloomy 0.1% print in last week's initial estimate of first-quarter GDP. How much the deficit narrows, if at all, in March will determine the size and direction of subsequent revisions to that initial GDP estimate. (MC)
        BRAZIL: Markit Economics April Brazil services PMI. [In March index was 51.]
        For a developing economy, Brazil has a fairly large services sector. This indicator, like those of other Brazilian economic sectors, has been showing that it is only just eking out growth. (MC)
        U.S.: 1 p.m. EDT. U.S. Institute for Supply Management semiannual report on business & economic forecast.
        This six-monthly report is useful for gleaning American industry's longer-term outlook on the economy -- as opposed to that of Wall Street economists. It is based on responses to more forward-looking questions than those contained in the monthly purchasing manager surveys. (MC)
        U.S.: 7 p.m. EDT. Federal Reserve Board Governor Jeremy Stein speech at Money Marketeers event in New York.
        Jeremy Stein is resigning his post at the end of this month. He's probably like to bite his tongue until he returns to Harvard after that. But the economist has been a thoughtful, relatively outspoken governor, emerging as an influential critic of quantitative easing. And this is a gathering in which he'll be hit with some tough questions. His responses could be interesting. (MC)
        WEDNESDAY
        GERMANY: 2 a.m. EST (8 a.m., Berlin) March industrial orders [Expected up 0.2% on the month vs. up 0.6% in February]
        German industry is doing well. The latest PMI reports suggest a rebound from some of the softness at the start of the year. (AM)
        FRANCE: 2:45 a.m. EST (8:45 a.m., Paris) March industrial production (Expected up 0.3% on the month vs. up 0.1% in February)
        French domestic demand remains in the doldrums, but industry seems to be showing a pulse again. (AM)
        TAIWAN
        4 a.m. EDT (4:00 p.m. Taipei) April trade data [previous trade balance $1.95 billion, previous exports +2% on-year, previous imports +7.5% on-year]
        Taiwan posted its strongest GDP growth in more than a year in the first quarter as exports to the U.S. and Europe rose at the fastest clip in more than two years, even as exports to China barely grew. Still, economic growth is well below the rates seen before the financial crisis; Taiwan also is no longer a dominant player in manufacturing, with rivals from China, South Korea and Southeast Asia close on its heels. China's increasing reliance on locally produced raw materials and components is also cooling demand for Taiwanese products.
        Still, there was a bright spot in recent data for March export orders, an early indicator of actual exports, which rose 5.9% on-year for the fastest increase in three months. (CN)
        U.S.: 7 a.m. EDT. Mortgage Bankers Association weekly mortgage applications survey. [Last week: market composite index -5.9% on-week; purchase index -4.4%; refinance index -6.9%.]
        Mortgage demand is getting hit hard. That's not good for the property sector, and it's not good for the economy more broadly. The problem is that rates are not as low as they were at the same time that home prices aren't as cheap. Economists are hoping that pent-up housing demand and improved incomes will eventually overcome this affordability problem, but there's a Catch-22 issue in this because the health of the housing sector is itself vital for growth and jobs. (MC)
        BRAZIL: 8 a.m. EDT. (9 a.m., Sao Paulo.) March industrial production. [In February, +0.4% on-month; +5% on-year.]
        Brazil's economy is not firing on all cylinders. It is hoped that as the World Cup gets underway next month, demand will start to pick up. But for now, mediocre results in areas such as industrial output have become the norm. (MC)
        CANADA: 8:30 a.m. EDT. March building permits. [In February, -11.6% on-month.]
        An especially harsh winter contributed to the sharp drop in this number in February, but the drop was so large that it also provided an indication of how much the once-red-hot Canadian housing market has cooled. That's a problem for jobs in construction and elsewhere. (MC)
        U.S.: 8:30 a.m. EDT. First-quarter preliminary productivity. [Productivity expected -1.1% on-quarter vs. +1.8% in fourth quarter.]
        (MORE TO FOLLOW) Dow Jones Newswires

        May 05, 2014 00:00 ET (04:00 GMT)