What Matter for Global Markets in the Week Ahead

 
   By Michael J. Casey 
 

        WRAP:
        This week, the finance ministers and central bank governors of the world descend on Washington for the spring meetings of the World Bank and the International Monetary Fund. As always, it will be a bit of a circus, with lots of "bilateral" meetings aimed at resolving specific countries' problems -- Ukraine and Russia, for example, and of course the eurozone's problem child, Greece. There'll be polite differences of opinion expressed over China's sponsorship of a new development bank that's seen as a competitor to the World Bank and over Beijing's desire to have the yuan treated as a reserve currency by the IMF. Most important, there's a new global macro context giving greater relevance than normal to these meetings, namely the fact that the dollar has surged over the past year as U.S. monetary policy has diverged from others. Whatever is said about that is likely to be carefully worded -- officials don't want the market to keep treating the dollar as a one way upward bet but neither do they want to send a signal that might trigger a stampede out of the greenback.
        MONDAY
        CHINA: Time N/A. March trade. [Surplus seen $43.8 billion vs. $60.6 billion in February; exports seen +10% on-year versus +48.3% in February; imports seen -12% versus -20.5%.]
        Inevitably, exports are expected to suffer some payback from February's spectacular spike. That result was seen as an indication that the U.S. economic recovery was aiding Chinese manufacturers. Even if there is a slowdown in export gains for March, it will be important to look for signs that that underlying U.S. demand is still feeding into Chinese orders.
        ITALY: 4 a.m. EDT. (10 a.m, Rome) February industrial production. [Expected +0.6% on-month vs. -0.7% in January; expected -1.4% on-year vs. -2.2% in January.]
        The thinking is that Italian industry is riding on the coat-tails of a eurozone recovery and is due to reverse the poor performance of January.
        INDIA: 8 a.m. EDT. (5:30 p.m., New Delhi). March inflation. [National combined consumer price index in February was +5.37%.]
        Inflation numbers will be given special attention in India now that the Reserve Bank of India has embraced a formal inflation-targeting policy.
        TUESDAY
        INDONESIA: 2:30 a.m. EDT. (1:30 p.m, Jakarta.) Bank Indonesia Board of Governors meeting & decision.
        Indonesia is understandably worried about capital outflows and a weaker rupiah if and when the U.S. Federal Reserve raises rates -- that seems to have been a key reason why the government is introducing tax credit incentives for foreign direct investors to keep their money in the country. Those measures are intended to ensure that the duty for propping up the rupiah doesn't fall solely on the central bank, which would otherwise have to achieve that goal via growth-squeezing rate hikes.
        EUROZONE: 4 a.m. EDT (10 a.m. Frankfurt.) European Central Bank lending survey.
        Are bank loan officers more willingly opening their credit books now that the ECB has committed to an aggressive monetary easing plan?
        U.K.: 4:30 a.m. EDT (9:30 a.m., London). March monthly inflation figures. [Consumer price index was +0.3% on-month in February, unchanged on year; core CPI was +0.5% on-month, +1.2% on-year.]
        Inflation continues to plummet in the U.K. It's a key reason why the Bank of England has pulled back from a path toward higher rates.
        EUROZONE: 5 a.m. (11 a.m, Brussels.) February industrial production. [Expected +0.3% on-month vs. -0.1%; expected +0.7% on-year vs. +1.2% in January.]
        An improvement in eurozone industry seems to be underway. Whether it's sustainable is the question.
        U.S.: 8:30 a.m. EDT.
        --March advance monthly sales for retail & food services. [Overall sales expected +1.1% on-month vs. -0.6% in February; ex-auto sales expected +0.6% on-month vs. -0.1%.]
        February's retails sales were terrible. Economists are betting that was the anomalous result of super-cold weather and that March enjoyed a rebound from that deep prior-month trough.
        --March producer price index. [Expected PPI +0.2% vs. -0.5% in February; core PPI expected +0.1% vs. -0.5%.]
        Stabilizing oil prices have stopped the downward spiral in the producer price index but it will take some time for the impact of the sharp fall in crude to flush itself from the data. The bottom line is that there is still no sign of any real inflationary pressure.
        WORLD: 9 a.m. EST. International Monetary Fund publishes forecasts from its World Economic Outlook report.
        The U.S. was supposed to be the main engine of growth for the world economy this year. But it began 2015 with a sluggish performance, mostly because of a cold winter. That's likely to have led the IMF to downgrade its global growth forecasts.
        CHINA: 10 a.m. EDT. (10 a.m. Beijing.)
        --March foreign direct investment. [Previously +0.9% on-year.]
        --March industrial output. [Expected +6.9% vs. +6.8% in February.]
        --March retail sales. [In February, was +0.93% on-month.]
        --March fixed asset investment. [Expected +13.9% on-year vs. same rate of increase in February.]
        --First quarter GDP. [Expected +6.9% on-year vs. +7.3% in 4Q.]
        This monthly data dump is likely to include further signs that China's once super-charged economy is slowing. The idea that first-quarter GDP growth could slip below 7% is especially striking, but so too is the weakness in foreign direct investment and sluggish state of retail sales. Fixed asset investment remains reasonably strong but it's all coming from domestic sources, it seems, which means it potentially reflects an extension of a debt-fueled speculative bubble.
        WEDNESDAY
        FRANCE: 2 a.m. EDT. (8 a.m, Berlin) March consumer price index. [Expected CPI +0.7% on-month vs. +0.7%in February; expected CPI unchanged on-year vs. -0.3%.]
        Another month of rebounding prices would be a welcome sign, but on an annual basis the French CPI is still toying with deflation.
        JAPAN: Time N/A. Bank of Japan Governor Haruhiko Kuroda speech at the 90th Convention of the Trust Companies Association of Japan
        Mr. Kuroda is coming under tacit criticism from more conservative quarters in Japan over his aggressive commitment to asset purchases.
        EUROZONE: 7:45 a.m. EDT. (1:45 p.m., Frankfurt.) Monetary policy announcement.
        The ECB will for now stick to its plan to keep buying 60 billion euros worth of bonds a month. But look for any signs that it is satisfied with the early indications of an economic recovery. It eventually might lead some investors to roll back the projected end date for the quantitative easing program.
        U.S.: 9:15 a.m. EDT. March industrial production & capacity utilization. [Expected industrial output -0.5% on-month vs. +0.1% in February; capacity utilization expected 78.7% vs. 78.9%.]
        Industrial output is not unhealthy in the U.S. but it's still running short of the kind of capacity utilization rates that have fueled inflation in the past. That's one reason why the Fed feels comfortable taking its time before it raises rates.
        CANADA: 10 a.m. EDT. Bank of Canada interest rate announcement.
        Canada's economy unexpectedly added 29,000 new jobs in March, whereas economists had forecast a 10,000 decline. That makes it more likely that the BOC will keep its overnight rate steady at 0.75%
        U.S.: 2 p.m. EDT. Federal Reserve Beige Book.
        The Beige Book's region-by-region breakdown of the U.S. economy offers a useful way to gauge the impact of the cold winter on business activity as the North was likely more affected by it than the South.
        U.S.: 7:30 p.m. EDT. Federal Reserve Bank of Richmond President Jeffrey Lacker speaks in Charleston, S.C.
        Mr. Lacker has been unfazed by the weather-induced slowdown in the U.S. economy and continues to be the most outspoken voting member of the Federal Open Market Committee calling for a rate hike in June.
        POLAND: Time N/A. National Bank of Poland interest rate decision.
        The central bank announced a bigger-than-expected half-percentage-point cut in its benchmark rate to 1.5% last month, part of a bid to fight deflation. After that it's likely to sit on its hands this time.
        THURSDAY
        U.S.: 8:30 a.m. EDT.
        --March new residential construction, housing starts and building permits. [Expected starts +15.7% on-month at 1.038 million annualized vs. -17.9% in February at 897,000 annualized; expected permits -0.6% on-month at 1.092 million vs. +3% in February at 1.102 million annualized;.]
        The housing construction data were skewed during the first quarter because of interruptions caused by inclement weather. Hence the big swings in the starts numbers. It will take a few months of warmer weather to get a clear reading of how this industry is truly fairing.
        --Unemployment insurance weekly claims report - initial claims. [Weekly claims expected 280,000 vs. 281,000 in prior week.]
        The jobless claims data are offering the strongest proof that the weakness seen in other indicators has been a temporary, weather-induced phenomenon. Companies clearly aren't laying off people in large numbers.
        WORLD:
        --8:45 a.m. EDT. World Bank President Jim Yong Kim press briefing
        --9:50 a.m. EDT International Monetary Fund Managing Director Christine Lagarde press briefing
        --Time N/A. Group of 20 Finance Ministers and Central Bank Governors Meeting concludes
        The press conferences kick off the semiannual gatherings of the two Bretton Woods institutions, which as always coincides with a meeting of G20 finance ministers. At issue for the IMF are unresolved problems such as Greece's debt rollover and Ukraine's bid for loans to bolster its reserves. More broadly, there will discussions, both at the IMF and in the sideline G20 meeting, about the pace of global growth and the likely impact that future U.S. rate hikes could have on that. There's also bound to be some tension over China's sponsorship of the new Asian Infrastructure Investment Bank, which some see as a competitor to the World Bank and Asian Development Bank and therefore as a challenger to U.S. influence.
        (MORE TO FOLLOW) Dow Jones Newswires

        April 13, 2015 00:00 ET (04:00 GMT)

        U.S.: 1:30 p.m. (6:30 p.m., London). Federal Reserve Bank of Boston President Eric Rosengren speech at Chatham House.
        The opposite of Lacker, who was due to speak on Wednesday, Mr. Rosengren is a dyed-in-the-wool inflation dove. He is not currently a voting member of the FOMC.
        U.S.: 1:10 p.m. EDT. Federal Reserve Bank of Cleveland President Loretta Mester speech at the Forecasters Club of New York Monthly Meeting.
        Ms. Mester is no longer a voting member, either. She is seen as something of a centrist and generally feels that the Fed needs to normalize monetary policy sooner rather than later.
        U.S.: Time N/A.
        --Federal Reserve Bank of Atlanta President Dennis Lockhart speaks at the Economic Council of Palm Beach County
        Mr. Lockhart is the quintessential independent on the FOMC -- neither fervent dove nor hardline hawk.
        FRIDAY:
        EUROZONE: 5 a.m. EDT. (11 a.m. Brussels) March harmonized consumer price index. [CPI expected +1.1% on-month vs. +0.6% in February; expected -0.1% on-year vs. -0.3% in February; core CPI expected +1.3% on-month vs. +0.6% in February; expected +0.6% on-year vs. +0.7% in February.]
        Disinflationary effects are thought to have dissipated in March.
        U.S.: 8:30 a.m. EDT. March consumer price index. [Expected +0.3% on-month vs. +0.2% in February; core CPI expected +0.2% on-month vs. +0.2%.]
        The downward pressure on inflation measures is also expected to have eased somewhat in the U.S.
        U.S.: 10 a.m. EDT. University of Michigan mid-April (preliminary) survey of consumers. [Sentiment index expected 94.0 vs. 93.0 end-March.]
        American consumers generally seem to be in a good mood.
        WORLD: Time N/A.
        --Group of 20 Finance Ministers and Central Bank Governors Meeting concludes.
        --IMF and World Bank Spring meetings open.
        The G20 communique will be looked to for any indications that the group is either concerned or satisfied with the strength of the dollar and the imbalances in monetary policy around the world.
        (END) Dow Jones Newswires

        April 13, 2015 00:00 ET (04:00 GMT)

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