WRAP: Last week's policy statement from the Federal Reserve may have been a game-changer ... or maybe not. On the one hand, the Fed is clearly wary of encouraging markets to project an expedited rush into the first U.S. rate hike in more than eight years; it also seems to be little worried that the ever-strengthening dollar is eating into growth and keeping inflation short of the Fed's 2% target. On the other hand, it's also clear that the Fed has created a more flexible "data-dependent" situation for itself, where it has more leeway to quickly tighten monetary policy if the economic numbers warrant it. There's uncertainty in the Fed outlook, in other words, which means that both forthcoming data and commentary from Fed officials are going to carry even greater importance. So pay attention to the kinds of events highlighted in this weekly calendar roundup.
By Michael J. Casey
MONDAY
ISRAEL: 10 a.m. EDT. (4 p.m. , Tel Aviv). Bank of Israel interest rate announcement.
For much of the past few years, Israel's biggest concern has been that the shekel was too strong -- the result of persistent investment flows spurred by a big offshore gas find. But things have turned the other way, rapidly; the shekel has of late found itself under pressure as the dollar has surged. After a surprise rate cut at last month's meeting the dollar surged against its Israeli counterpart, eventually surpassing 4 shekels for the first time in two-and-a-half years. That response likely ensures that the central bank will hold tight with its benchmark rate at a record low level of just 0.1%.
EUROZONE: 10 a.m. EDT. (3 p.m., Brussels) President Mario Draghi appears at Committee on Economic and Monetary Affairs.
The ECB's quantitative easing program has only just begun and Mr. Draghi, having fought so hard to get this far, won't be wanting to change course any time soon. But there are signs that the eurozone economy is improving, so it's worth at least asking the question: if this improvement were to continue, might the ECB consider ending QE earlier than currently envisaged? The main counterargument to that -- other than that there is not yet enough conclusive data to prove that a recovery is underway -- is that inflation continues to be very low to non-existent. The ECB is a long way from its price stability mandate, which prefers an inflation rate close to 2%.
U.S.: 10 a.m. EDT. National Association of Realtors February existing home sales. [Expected total Sales 4.9 million, up 1.7% from 4.82M in January, when sales were down 4.9% on month.]
It's hard to get a good read on housing stats right now, with another excessively cold winter in the Northeast again interrupting the market. But one thing's clear: over time there needs to be continued gains in housing to lead the economy higher.
EUROZONE: 11 a.m. EDT. (4 p.m., Brussels). March consumer confidence indicator. [Seen -5.8 vs. -6.7 in February.]
Sentiment among eurozone citizens is improving, with the worst of the region's financial crisis seemingly behind them and with some economic indicators showing signs of improvement, along with soaring stock markets. But it's worth noting that this index is still in negative territory.
GERMANY/GREECE: Time N/A. German Chancellor Angela Merkel meets Greek Prime Minister Alexis Tsipras.
The Greek crisis has bubbled up again as the new government digs in its heels over European Union demands that it come up with concrete actions to match the loose commitments to policy changes it made to secure a debt rollover last month. The fact that Mrs. Merkel has seen fit to get involved suggests there are real concerns in Europe's heartland that Mr. Tsipras and his rebellious colleagues could cause trouble for the currency union.
U.S.: 12 p.m. EDT. Federal Reserve Vice Chair Stanley Fischer speech at the Economic Club of New York.
Mr. Fischer is a very important player in the shaping of Fed policy. It will be interesting to see how he frames the message that was supposed to emerge out of last week's FOMC statement. Was it as dovish as the market's response made it out to be? How concerned is the Fed about the strong dollar's impact on growth and inflation?
U.S.: Time N/A. Federal Reserve Bank of New York President William Dudley speaks at Symposium for College Professors.
Mr. Dudley is on par with Mr. Fischer for importance in shaping policy. Coupled with the Fed Vice Chairman's speech, this one from the New York Fed President could give fixed income and currency markets get a clearer idea of where the Fed would prefer them to be priced.
CHINA: 9:45 a.m. EST. March HSBC flash manufacturing purchasing managers index. [End-Feb. PMI was 50.7.]
Last month's reading represented the strongest showing for this indicator in seven months. But other data have suggested continued softness in the Chinese economy. It will be important, therefore, to see if February's rebound in manufacturing activity continued into March. One worrying sign in last month's report was that there was a fall in export orders, a leading indicator.
TUESDAY
EUROZONE: Markit's preliminary (flash) March purchasing manager indexes.
--FRANCE: 3 a.m. EST. (9 a.m., Paris) [Manufacturing PMI expected 48.5 vs. 47.6 end-February; services PMI expected 52.8 vs. 53.4 in February.]
--GERMANY: 3:30 a.m. EST. (9:30 a.m., Berlin) [Manufacturing PMI expected 51.5 vs. 51.1 end-February; services PMI expected 55.0 vs. 54.7 in February.]
--EUROZONE: 4 a.m. EST. (10 a.m., Brussels) [Manufacturing PMI expected 51.5 vs. 51.0 end-February; services PMI expected 53.9 vs. 53.7 in February.]
Slowly but surely, the eurozone factory sector is recovering. That will again be the conclusion if these survey data come out in line with the consensus forecasts.
U.K.: 5:30 a.m. EDT. (9:30 a.m, London).
--February consumer price index. [In January, CPI-0.9% on-month, +0.3% on-year; CPI core -0.8% on-month, +1.4% on-year.]
--February producer price index. [In January, core PPI+0.2% on-month, +0.5% on-year.]
One reason that the Bank of England has suddenly started sounding more dovish -- calling for a weaker pound, for example -- is because inflation has not only ceased to be a problem on the upside but is now starting to look dangerously weak on the downside.
U.S.: 6:05 a.m. EST. (10:05 a.m., London) Federal Reserve Bank of St. Louis President James Bullard speaks in London.
Bullard's not a voting member and he won't be able to speak for the consensus per se, but his views are often though-provoking and with so much focus on the timing of a Fed rate hike, what he says should get some attention.
U.S.: 8:30 a.m. EST. February consumer prices index. [Expected +0.2% on-month vs. -0.7% in January; core CPI expected +0.1% on-month vs. +0.2%.]
Core CPI -- which strips out food and energy prices--was showing an on-year inflation rate of 1.6% last month, 0.4 point below the Fed's 2% target. That would be the envy of governments in other developed regions where outright deflation is a real risk. But the direction is still lower for prices and this time it's not just oil prices to blame but the relentlessly strengthening dollar, which drives down import prices. This outlook for continued below-target inflation is one reason why the Fed might choose to wait before hiking rates.
U.S.: 10 a.m. EST. February new residential sales. [Expected -4.2% on-month to annualized rate of 461,000 unit vs. January's -0.2% on-month decline to 481,000.]
As with other parts of the housing sector, it will be important to discount these numbers for the effect of cold weather in the Northeast on sales -- and to see if warmer regions showed signs of underlying strength.
WEDNESDAY
GERMANY: 5 a.m. EDT. (10 a.m., Berlin). March Ifo Business Climate Index. [Business Expectations Index seen 103.0 vs. 102.5 in February; Business Sentiment Index seen 107.3 vs. 106.8; Current Conditions Index seen 111.9 vs. 111.3.]
One of the most upbeat European indicators of the past few months has been the surprisingly strong rebound in German business confidence. The forecast here indicate that economists see this continuing.
U.S.: 6:30 a.m. (10:30 a.m, London) Federal Reserve Bank of Chicago President Charles Evans speech in London.
Last week, Mr. Evans -- an unabashed dove who has a vote on the FOMC this year -- was one the first officials to speak publicly after Wednesday's FOMC statement. He sought to make it clear that the statement left open the real possibility that rates could stay at zero for the rest of the year. He'll likely send a similar message at this event.
U.S.: 8:30 a.m. EST. February Advance Report on Durable Goods. [Expected +0.3% on-month vs. +2.8% in January.]
Last month's big jump was almost entirely explained by big orders in the notoriously volatile transportation sector, which can be distorted by the flow of airplane sales. Stripped of that, its gain wasn't that impressive, given that durables had been weak for three straight weeks.
THURSDAY
GERMANY: 3 a.m. EDT. (8 a.m., Berlin). GfK April consumer climate survey. [Expected 9.9 vs. 9.7 for March.]
As German business confidence improves, so too does consumer confidence. What the rest of the eurozone wants to see happen, though, is for that confidence to translate into spending on goods imported from the peripheral regions of the continent.
SWEDEN: 4:30 a.m. (9:30 a.m, Stockholm) February producer price index. [In January, PPI was +0.2% on-month, +0.2% on-year.]
Last week's surprise rate cut and bond purchase announcement from the Riksbank sent the krona tumbling. The driving factor behind that decision was the mounting threat of deflation in the Swedish economy. These numbers will shed some light on that risk.
EUROZONE: 5 a.m. EDT. (10 a.m., Frankfurt). European Central Bank releases February report on monetary developments in the euro area (M3). [M3 is expected to show a 4.1% on-year gain over three-month average vs. +3.6% in January.]
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2015 06:00 ET (10:00 GMT)
Economists are expecting that money aggregates accelerated their expansion in February, even though the ECB's quantitative easing program didn't start until March. That goes to show the powerful extent of the announcement effect. Encouragingly, it appears to have spurred banks to open up credit lines and get the flow of money going.
U.K.: 5:30 a.m. EDT. (9:30 a.m., London). February retail sales. [In January, retail sales -0.3% on-month, +5.4% on-year.]
There have been contradictory signals over the state of U.K. retail sales. We're in need of a clearer picture to see if the robust performance that was seen for much of last year can be sustained.
CZECH REPUBLIC: 8 a.m. EDT. (1 p.m., Prague). Czech National Bank interest rate decision.
With its benchmark interest rate already as low as 0.05%, the central bank is not expected to take further action. But with Scandinavian central banks taking their rates into negative territory and launching bond-buying programs, it might be tempted to do something similar radically to stave off the deflation that's being imported via a rapidly depreciating euro.
U.S.: 8:30 a.m. EDT. Unemployment Insurance weekly claims report. [Initial claims expected 290,000 vs. 291,000 in prior week.]
After some big swings around the turn of the year, the claims data seemed to have slotted back into their sub-300,000 routine, a number that implies the labor market is tight.
CANADA: 9:30 a.m. [1:30 p.m, London). Bank of Canada Governor Stephen Poloz speech at the Canada-UK Chamber of Commerce, followed by press conference
Poloz has indicated that the Bank of Canada's surprise rate cut in January has restored an appropriate balance to Canada's economic outlook -- one caught between the deflationary effect of falling oil prices and the potential for a boost to non-energy exports via the U.S. economic recovery. As such, this cautious central banker is unlikely to signal that Canada will do more than that any time soon, especially given that the Canadian dollar has already weakened considerably versus its U.S. counterpart.
MEXICO: 3 p.m. EDT. (1 p.m, Mexico City). Banco de Mexico monetary policy decision announcement.
Despite the blow to its oil industry from lower international prices, Mexico's central bank is showing little willingness to follow other emerging markets down the monetary stimulus path. Like Canada, most of its exports are to the U.S., so it gets a direct benefit from the rising dollar without worrying as much about lost competitiveness to rapidly weakening currencies such as the euro. Accordingly, its governor, Agustin Carstens, has signaled a continuation of an orthodox, market-led approach; the central bank will let the currency market provide the stimulus the Mexican economy needs and, in case the peso falls too far, may even raise rates if and when the Fed does so, to prevent excessive capital flight. Don't expect this meeting to result in any change in "Banxico's" benchmark rate from its current 3% level.
JAPAN: 7:30-7:50 p.m. (8:30-8:50 a.m Friday, Tokyo).
--February household spending. [Expected wage-earner household spending -3.1% on-year vs. -4.3% in January.]
--February national consumer price index. [Expected CPI +2.1% on-year vs. +2.2% in January.]
--March Tokyo consumer price index. [Expected CPI +2.2% on-year, unchanged from February.]
--February preliminary retail sales. [In January,-2% on-year.]
Japan's year-on-year inflation numbers continue to be distorted by the lagging effect of last April's sales tax hike. Stripped of that, the CPI is showing virtually zero expansion. What Japan most needs in order to address that problem is a pickup in household spending and retail sales. That would give a domestic impetus to price pressures. It's not clear that February's data will show any significant improvement from the depressing state showed by those indicators in January, however.
FRIDAY
U.K.: 3 a.m. (7 a.m, London) Nationwide Building Society March Nationwide House Price Index. [In February, index was -0.1% on-month, +5.7% on-year.]
Britain's housing boom has moderated. Last month, the rate of annualized growth in this index dropped to a 17-month low and the on-month decline was the first since September.
U.S.: 8:30 a.m. EDT. Final estimate fourth-quarter GDP. [Expected +2.4% annualized growth vs. +2.2% prior estimate for 4Q.]
Data showing there has been increased consumer spending on health services provide the main reason why economists expect an upward revision in the GDP estimate.
U.S.: 10 a.m. EDT. University of Michigan end-March consumer sentiment index. [Expected 92 vs. 91.2 mid-March and down from 95.4 end-Feb.]
The index moderated in the mid-March reading, having been especially strong in prior months. The survey team attributed that to a loss of confidence among households who faced higher utility bills on account of the cold weather and higher heating costs. In other words, the windfall of lower gasoline prices has been counteracted by the greater need for heating fuel. As with other U.S. economic indicators, it will be important to see how these data look after we've escaped the clutches of this cold winter.
(END) Dow Jones Newswires
March 23, 2015 06:00 ET (10:00 GMT)
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